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Start-up NY: 100% Tax-Free for 10 Years?
31–40 of 110 posts
Re: Start-up NY: 100% Tax-Free for 10 Years?
#32Not sure this is anywhere as good as it sounds. Most startups aren't profitable for several years (if ever), so income tax would not be an issue during this period. Even after there is income, there would be loss carry-forwards that would have soaked up income taxes from the first couple of profitable years. So this probably doesn't produce much benefit for much/most of the 10 years.
Eliminating sales tax isn't that big a benefit either: SASS, social, or other popular startup types would not pay much of this anyway (on purchases of desks, computers, etc?).
Property tax benefits could be sizable, though many bootstrapped startups don't have this for a couple of years anyway.
Cutting franchise taxes provides a small benefit that would probably help all startups.
As others have pointed out, the non-tax costs of being in an expensive city like NYC are substantial. And don't forget, NY isn't waiving personal income taxes—so if your startup does hit a homerun, they'll take their pound of flesh on the back end.
For some startups (like the rare one with high anticipated sales tax costs), this program might be enough to tip the scales in favor of locating in NY. For most startups, however, state/local tax cuts in the first 10 years are just not that big a deal. As the saying goes: don't let the tax tail wag the dog.
Looking at the policy from a macro perspective, it looks a lot like what Swiss cantons do to negotiate tax breaks for a limited time based on anticipated future tax revenues and job creation. Also seems a lot like what Ireland has done to build up its tech sector (and been chastised for of late: see Apple, Google, etc.). So it could be produce benefits (for NY), but it would of course pull talent from other regions, thereby reducing the net benefit.
Re: Start-up NY: 100% Tax-Free for 10 Years?
#33Don't start your startup in New York or San Francisco. Rents here are twice what they are in more reasonable parts of the country, and you get absolutely nothing in exchange except maybe a slightly-less-shallow talent pool. (Oh, and cockroaches. Lots of cockroaches.) Your employees will be paid twice as well, and your offices will be twice as nice... for free... if you locate yourself outside the expensive parts of t…
I just want to point out that there are large portions of New York that are not New York City
Pedantically, the name of the city is just New York. Given the context ("or San Francisco"), I think it's clear he didn't mean to include Buffalo. "New York or California" would have meant the entire state.
Re: Start-up NY: 100% Tax-Free for 10 Years?
#34Don't start your startup in New York or San Francisco. Rents here are twice what they are in more reasonable parts of the country, and you get absolutely nothing in exchange except maybe a slightly-less-shallow talent pool. (Oh, and cockroaches. Lots of cockroaches.) Your employees will be paid twice as well, and your offices will be twice as nice... for free... if you locate yourself outside the expensive parts of t…
Yes, everyone, please stay out of the Bay Area! Don't even consider locating here, it's a hellhole!
Re: Start-up NY: 100% Tax-Free for 10 Years?
#35um...silicon valley already has this covered: you only pay taxes on revenues. (badam CHING).
profits, actually. But yes, "pre-revenue" companies have little to worry about in terms of corporate-level income taxes. Of course, if one of these pre-revenue startups gets gobbled up a la Instagram, then the founders and investors end up with large personal income tax bills—which are not affected by the NY policy. And yes, I realize your original comment was a joke, but it does raise a relevant point about the impact (or lack thereof) of the NY policy.
Re: Start-up NY: 100% Tax-Free for 10 Years?
#36Don't start your startup in New York or San Francisco. Rents here are twice what they are in more reasonable parts of the country, and you get absolutely nothing in exchange except maybe a slightly-less-shallow talent pool. (Oh, and cockroaches. Lots of cockroaches.) Your employees will be paid twice as well, and your offices will be twice as nice... for free... if you locate yourself outside the expensive parts of t…
I have a small company in New York, and agree with all of your reasons why it's terrible.
The one advantage besides talent pool (which is a big advantage!) that both New York and San Francisco have, and that's often overlooked, is proximity to customers. If you're in a business where high touch sales are important, or where you need to be able to meet regularly with your customers, it's very difficult to do remotely.
I'm not sure if the cost-benefit really plays out in New York's favor. I often think that for what it costs to live here, it might be cheaper just to fly in twice a month from someplace else. But it's certainly an advantage I underestimated when I started out.
Re: Start-up NY: 100% Tax-Free for 10 Years?
#37As a New Yorker, I think this sucks. We already pay high taxes and if somebody gets a tax break that means all the rest of us will pay even more.
Is there a provision that actually raises some tax along with this tax break?
Re: Start-up NY: 100% Tax-Free for 10 Years?
#38Not sure this is anywhere as good as it sounds. Most startups aren't profitable for several years (if ever), so income tax would not be an issue during this period. Even after there is income, there would be loss carry-forwards that would have soaked up income taxes from the first couple of profitable years. So this probably doesn't produce much benefit for much/most of the 10 years. Eliminating sales tax isn't that…
I didn't think they were waiving personal income taxes either, but it actually looks like they are:
What is the Personal Income Tax exemption for employees?
Employees of businesses in START-UP NY will pay no income taxes on their wages for the first five years. For the second five years, employees will pay no taxes on income up to $200,000 of wages for individuals, $250,000 for a head of household and $300,000 for taxpayers filing a joint return.
Re: Start-up NY: 100% Tax-Free for 10 Years?
#39The hidden fine print is that you have to affiliate with a university and support that university's mission. I wonder how loose they'll be in interpreting that support. Does "providing internships to students every summer" count, or will it need to be more substantial?
Re: Start-up NY: 100% Tax-Free for 10 Years?
#40Don't start your startup in New York or San Francisco. Rents here are twice what they are in more reasonable parts of the country, and you get absolutely nothing in exchange except maybe a slightly-less-shallow talent pool. (Oh, and cockroaches. Lots of cockroaches.) Your employees will be paid twice as well, and your offices will be twice as nice... for free... if you locate yourself outside the expensive parts of t…
...unless you're looking for investment cash.