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Texas vs. NY: A new tax rivalry

By Kay Bell ·
Tuesday, June 4, 2013
Posted: 5 pm ET

I'm an avid sports fan, so I tend to view much of the rest of real life, including taxes, with a similar competitive perspective.

Here in Texas, we baseball and football fans have a long-standing rivalry with some New York teams. If the MLB stars align, our Rangers go head-to-head with the Yankees for the American League title. It's even more intense in the NFL, where the Cowboys and Giants duke it out each fall in the same division.

Now the governors of the two states have initiated a new tax rivalry.

The Texas legislature recently passed $1 billion in tax breaks, including more than $7 billion for businesses, that Gov. Rick Perry had championed. These benefits are key to the Republican governor's attempt to entice even more companies to move their headquarters to or set up additional operations in the Lone Star State.

This latest multibillion dollar measure just adds to Texas' taxpayer-funded largesse to businesses, which by some counts is the most generous in the United States.

No-tax New York

But New York is rising to the challenge.

The Empire State's Democratic governor is upping the ante. Gov. Andrew Cuomo wants to establish tax-free zones in areas around New York's public universities. New and existing businesses that set up shop in the campus areas would be exempt from corporate, property and sales taxes for 10 years.

But wait, there's more. New York would match, at least temporarily, Texas' no personal income tax status. Business owners and company employees would be exempt from the state's income taxes, also for a decade.

"By tax-free," said Cuomo, "I mean really, really tax-free."

Take that, Texas!

Tax fairness issues

Will New York lawmakers give Cuomo what he wants?

While providing new jobs is always appealing to politicians, states also must take in enough money to provide services that citizens demand. Removing a chunk of taxable income from that equation poses some basic budget math problems.

Then there's the fairness issue that always comes up whenever taxes are discussed at any governmental level.

Some New York legislators and business groups say it's unfair for some residents to pay one thing, while others don't pay a penny. And many business owners in still-taxed areas of the state are asking, "What about us?"

The New York Assembly session ends June 20. That gives Cuomo and his tax-free plan advocates just more than two weeks to round up enough support to get the measure approved.

I know Rick Perry will be among those watching the debate closely.

What do you think? Should states offer special tax breaks to entice businesses to relocate?


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Veteran contributing editor Kay Bell is the author of the book "The Truth About Paying Fewer Taxes" and a co-author of the e-book "Future Millionaires' Guidebook."

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Keith B Rosenberg
June 06, 2013 at 9:08 pm

I guess even more businesses will leave California now!

June 05, 2013 at 9:23 am

No, I do not believe governments should be allowed to offer preferential treatment to anyone. Everyone (corporation or individual) should pay the same rate. If states want to encourage business development, they should lower tax rates for everyone, not on a case by case basis.