Start Up NY: a plan for more poverty brought to you by Governor Cuomo

Wednesday, July 2, 2014

With election season in full swing it is time for the governor hand out some money. So in time for the election, but not too soon to yield any data, NY is rolling out Start Up NY. This program was sold to the public as a way to create new jobs by helping start up companies. These companies who partner with a local universities and get a 10 year grace period for taxes for them and their employees. Recently the Start Up board announced some winners in the Rochester Area as three location were approved for the U of R. Two are at the old Kodak Park site and the other is in Henrietta. Even if this program made sense the board fails to understand that neither of these are near the U of R. Of course these applicants for this space are not start up companies either and at least one is just relocating to these tax free zones. While this may seem like a misuse of the program the web site for Start Up NY encourages this sort of behavior. The problems with this program are many, but there is an underlying premise to this program that makes some sense. Start up companies have a lot of disadvantages, it is almost impossible for them to raise capital and they can not afford to hire the workers they need. Thus the state providing incentives would make some sense as it would decrease the failure rate of a start up company. The problem is that this program is not focusing on start up companies nor is it trying to help students at major university turn their ideas into businesses nor does it even see proximity as a requirement. It is being used like every other corporate welfare program the state has ever tried, just a way to give some businesses huge tax breaks. The granting of tax breaks to big business has a long history but has few results. Despite the good intentions of these programs they tend to go companies already in the state who use relocation to lower their costs. All these programs seem to specialize in helping the well connected and frequently use local tax breaks to fund these state projects. In effect they are unfunded mandates. COMIDA is a perfect example this uses local tax breaks to fund this state program thus costing local towns money with little positive return. Supporters claim that the jobs created put millions into the local economy through wages which offsets the lost taxes but this is not how they really work. After all giving tax breaks does not lower the amount of money needed by government it only means the rest of the people have to pay more. With property taxes this means rents go up and property values stagnate so everyone has to pay more for housing. As some of this housing is funded by government money that means taxes need to go up more and a cycle of rising costs is created. The affect is everyone has less money to spend. As our economy is fueled by consumer spending this means less growth everywhere but for the favored few with tax breaks. Which usually means no real job growth. This is held up by the numbers as Ny state job growth during the last decade has mirrored population growth for the state. Finally our economy is based upon competition. When tax breaks are granted to one company that company has a competitive edge allowing them to make a higher profit or lower prices than their competitors. Even when this results in job growth it is often at the expense of other firms without tax breaks. This is particularly evident when tax breaks are granted to commercial businesses. Just because a new restaurant opens that does not mean that more people will pay to go out to eat. Most patrons who attend the new restaurant would have gone to some other place and usually spent roughly the same amount of money. AS a result their is no real growth in our economy. Despite a long history of failure in the job creation market our leaders seem to have no other tool than tax breaks for economic development. Yet investments in education, infrastructure, and health care all have proven track records for economic growth. Our government could also start investing in the future. They could make start up money available, require banks to loan money in local areas, invest in new technologies, or even try new deal style work programs. Despite these options it seems that neither Astorino nor Cuomo have any plan other than tax breaks. Thus barring a Howie Hawkins miracle it looks like 4 more years of austerity for the rest of us.

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...on Transforming Rochester on Rochester Free Radio. You can see when it's on at the Rochester Free Radio show schedule.

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