ALBANY, N.Y. (AP) — Through much of the last century, New York built America's locomotives, automobile parts, steel girders and more through three shifts a day. Today, the Empire State is next to last on CEOs' list of states to set up shop.
The decline came over more than four decades of economic erosion for much of the state outside New York City's nearly unshakable economy. The state played a high-stakes game of offering tax breaks, but it yielded more political scandal than economic turnaround.
Now, Gov. Andrew Cuomo wants to go all in.
He's proposing a new way to lure high-tech companies and entrepreneurs by waiving all business and property taxes and even state income taxes for all their employees for up to 10 years if they move to New York and partner with a college campus.
As the governor touts the tax-free pitch as a major upstate economic development plan, policy experts say it's a unique approach but warn it could backfire and actually hamstring the state's economy. Either way, other states are watching closely.
"This is exactly the kind of thinking that makes New York score so poorly in our tax index," said Scott Drenkard, an economist with the Washington, D.C.-based Tax Foundation, a nonpartisan, national tax research association. "The bread and butter of a good tax policy is its broad-based taxes. That means you don't have giveaways to certain businesses. Instead, you operate on a level playing field."
Cuomo spent much of last week barnstorming around the state to pitch his biggest and most aggressive attempt to turn around what for decades has been dubbed the "upstate problem:" young New Yorkers fleeing for jobs elsewhere. Cuomo said his proposal will supercharge job creation.
But his plan also raised broad concerns. Academics fear a commercialization of higher education, while business leaders say the proposal makes second-class citizens out of the businesses that stuck around and paid taxes through hard times.
Under the plan, people who already live in New York would foot the bill for services for new companies that will enjoy no taxes for 10 years. There's also no guarantee the new companies, some of which will be highly mobile startups, will stay after the 10 years. And even if Cuomo wins two more terms, he'll be long gone by then.
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