It’s too soon to tell if New York’s Tax-Free NY will transform State University of New York (SUNY) campuses and university communities, as Governor Cuomo announced, but it could spark similar initiatives in other states. In his remarks about Tax-Free NY, Senate Majority Coalition Co-Leader Jeffrey Klein alluded to competitive pressures impacting New York and other states: “In order to compete in today’s hyper-competitive global marketplace, we need to continually develop bold and creative ideas to attract the best and fastest growing companies.”
The idea of cutting taxes in designated areas (e.g., enterprise zones) to spur economic development isn’t new. But Tax-Free NY has several unique components. The tax incentive package is big—it includes income, sales, property, and businesses tax exemptions. And it’s available to businesses that operate within 200,000 square feet of all SUNY campuses outside New York City and designated private colleges north of Westchester. These businesses qualify if their mission is related to that of the host university’s or create new jobs. But perhaps the package’s most unique feature is the income tax exemption for the businesses’ employees.
While Connecticut’s 2010 Bioscience Initiative doesn’t include income tax exemptions, it does extend the popular enterprise zone property tax exemptions and corporation business tax credits to businesses operating in designated areas near John Dempsey and Bristol hospitals and the Hospital of Central Connecticut. These tax incentives were part of larger package that included over $200 million in bonds for new construction and renovations at the UConn Health Center.
Although the initiative did not include income tax exemptions, the idea of using such exemptions to spur economic development in distressed areas has been proposed before. In 1997, the legislature’s Task Force to Study Alternative Tax Policies to Benefit Urban Centers examined how tax policy, along with other factors, affected the economic ups and downs of Connecticut’s cities and recommended, among other things, eliminating the income tax for 15 years in targeted urban centers. The task force’s report (PA 96-245, § 40) is available in the Legislative Library
