The state of New York has announced that it is to launch Start-Up NY, a tax-free zone scheme which it is hoped will attract new investment and help existing businesses to expand. “The most ambitious economic development programme in New York state’s recent history,” was how Andrew Cuomo, the governor of New York state, described the initiative during its launch in late October. Start-Up NY will grant tax holidays for companies and their employees if they relocate or expand on the premises of the state-designated academic institutions.

Companies participating in Start-Up NY will be exempt from paying any taxes and franchise fees for 10 years, while their employees will pay no taxes for five years. After that time for the following five years, for the wages up to $200,000 annually, or up to $250,000 for the heads of households, and up to $300,000 in case of couples filling a joint tax return, will remain tax free.

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In the 2013 State Business Tax Climate Index, published by the Tax Foundation, a Washington, DC-based non-partisan research group, New York came last among all US states. The Tax Foundation also noted that with $6375 per capita paid to the state and local authorities, New York has the heaviest tax burden in the whole of the US. This is a situation those within the state hope Start-Up NY can help to improve. “In a tax-free environment, no one can match what New York has to offer. Businesses that are looking to startup or expand, and most importantly create jobs, should look no further,” said Mr Cuomo on the day of the programme launch.

Start-Up NY aims also to spread the investments more equally across the state. As fDI Markets data shows, between 2003 and 2012, New York state attracted 1893 new foreign and intra-state investments and ranked third in the whole of the US, after California and Texas. However, 1421 (more than 75%) of all projects launched in the stateWent to New York city. The programme is attempting to tackle that problem by designating many of the tax-free zones outside of New York city. It will also provide 280,000 square metres of space located at private colleges, of which 87.5% is located outside of the city.

“We are leveraging our world-class state of New York system and prestigious private universities to partner with new businesses, providing direct access to advanced research, development resources, experts in high-tech and other industries and all with zero taxes for 10 years,” said Mr Cuomo.