Stony Brook University is one of the SUNY centers where businesses could locate if incentivized by governor’s plan. File photo by Rachel Shapiro
May 30, 2013 | 10:15 AMBusinesses seeking partnerships with academia will be allowed to operate tax-free in zones around New York's public colleges for 10 years, under the terms of a proposal by Gov. Andrew Cuomo.
According to the governor's office, Tax-Free NY would waive companies' sales, property and business taxes, and income taxes for employees. In exchange, the companies would locate on a State University of New York campus — excluding those in New York City — or in "tax-free zones" defined as the 200,000 square feet surrounding each campus and be related to the academic mission of the university.
The offer would be extended to out-of-state firms looking to relocate to New York, as well as in-state companies that "expand their New York operations while maintaining their existing jobs." Existing companies, as well as startups, would be eligible, as long as the company creates new jobs.
Private universities in the state would also carve out tax-free zones on their campuses, a press release from the governor's office stated.
According to a source in the governor's office who spoke in a phone interview, sales, property and business taxes would be waived for 10 years, for companies participating in the Tax-Free NY program. For the first five years after setting up shop in a tax-free zone, a company's employees would not have to pay New York State income taxes.
From years five to 10, employees would have to pay state income taxes, capped at $200,000 per employee. Employees would have to pay federal income taxes because they are not included in the Tax-Free NY program, the source said.
When asked during a press conference in Albany this week about the possibility of a company leaving New York after getting tax breaks for 10 years, Cuomo said, "They could," adding that the state is trying "to change the basic trajectory of the tax rate, because you just can't be this inhospitable to business, and that's the long term." The governor also said he hoped New York in the future would be "in a fundamentally different position in terms of taxes" to keep companies in the state after their 10 years of tax exemptions are over.
The Tax-Free NY proposal will be submitted to the state Legislature as a bill to be discussed and voted on.
Stony Brook University President Dr. Samuel Stanley Jr. said in a statement that "the governor's plan not only opens the door, it essentially removes the barriers for startups and existing companies to succeed in New York State," and that the plan "will undoubtedly help launch hundreds of new businesses on Long Island."
Anil Dhundale, executive director of the Long Island High Technology Incubator located on the SBU campus, said he did not yet know how the Tax-Free NY proposal would affect the mix of 20 startup and older companies housed in the incubator. When asked about the importance of academic-business collaboration, Dhundale said a university "does research and education, but it does not develop products and sell them . . . that's the business of business. That's what a company does well." These partnerships, Dhundale said, sometimes result in "a potential new drug to treat a disease . . . and novel products coming out into the market."