A friend recently asked me about Startup-NY, New York’s new program ostensibly designed to help foster startups. As you might expect, the bark is better than the bite. Fundamentally, there are a bunch of complicated rules, exceptions, and requirements, and some conveniently unstated limits. Now, since I think the prerequisites will gut most of the program, I don’t expect those limits will get tested.
To me, this program, as with many political schemes, tries to be smarter than the market. We can barely figure out whether plain simple tax rate changes increase or decrease tax collections: who thinks they can improve startup job creation by this series of intertwined levers and dials? This violates the principle of Simplicity, affectionately known around here as the reverse Occam’s Razor — make the smallest possible change, so that you can explain what happened and why.
Here are some comments excerpted from emails on the subject:
Personal income taxes (NY State, NY City, Yonkers)
Employees hired for and whose jobs are certified as net new jobs in a tax-free area will pay no state or local income taxes for the first five years. For the second five years, employees will pay no taxes on income up to $200,000 for individuals, $250,000 for a head of household and $300,000 for taxpayers filing a joint return. There is an annual cap per business on the number of employees that qualify for this exemption and an annual cap statewide of 10,000 net new jobs (i.e., there will be a maximum of 10,000 tax-free jobs after year one, 20,000 tax-free jobs after year two, etc.)
Translation: if we drafted this well and it increases jobs, we want to claw back some of that incentive and maybe screw you into having followed the rules and then pull the rug out from under you.