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Tax Free NY: No State Taxes Isn't Upstate New York's Solution, Seceding From NYC is

Governor Cuomo has a sensible idea: the kind of idea that just goes to show how irrational the system is that he is trying to fix. The idea that he has is to set up tax-free zones in upstate New York so that it can siphon off some of the business from NYC and elsewhere; maybe, the line goes, this can make its cities look something more like Indianapolis and other successfully updated Rust Belt type places and less like the set of Blade Runner after having been abandoned for twenty years. Upstate New York needs something like this. But what upstate New York really needs is independence.

Naturally, urbanites from the city are going to hate this idea. Why should they have to pay the outrageous taxes of both the state and the city while businesses in upstate New York get off scott-free? This is probably why Governor Cuomo's plan will never become law to begin with. But there is no question that something has to be done. Upstate New York has been quietly dying for decades. Unlike other parts of the Rust Belt, upstate New York has not managed to find a new identity after manufacturing jobs either went overseas or became automated. Culturally and economically, upstate New York is much less like New York City than it is like Pennsylvania or Ohio. Without New York City, the state would probably still lean Democratic, but it would at least have a strong sense of two-party rule.

But, more importantly, upstate New York would not have to put up with a regulatory or tax regime that was designed for the country's most massive urban area. Instead, it would have a government that could respond to its own internal crises and try to compete for the businesses that have been rising up in Pennsylvania and Ohio on its own terms. If the state were unburdened by the preferences of the city, it would probably be free to develop its petroleum industry, something which is virtually non-existent now, but could pump new life into cities like Binghamton and Buffalo.

Governor Cuomo's plan for fixing upstate New York is a good gesture, but it is hard to see how it could work in the long run. Many people from outside of the state are not even aware that upstate New York exists. If people say they want to set up a business in New York, they are almost certainly talking about the city and, if Governor Cuomo is serious about attracting business to upstate New York, he will have to compete not only with the regulatory regime of the city (which is easy), but he will have to compete with governors from states like Indiana, Ohio and Pennsylvania who all have legislatures eager to slash some red tape. Good luck with that.

A better idea, though, would probably be to break the two up. Politicians from both the city and the rest of the state have never had much love lost and the union of the two has never really made much sense to begin with. During good economic times, it was a marriage where both could more or less ignore one another. As long as the factories were running upstate — the same way they were all over the Rust Belt — people in Rochester or Buffalo or Utica could ignore the regulations and taxes that would eventually stifle any attempts to set up new businesses. But now that the bottom has fallen out, that is no longer the case. The sooner the marriage ends, the better. It wasn't good while it lasted.

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