The 56th Governor of New York, Andrew Cuomo has become one of the most popular faces within the east coast startup ecosystem. His new initiative, Startup New York, means that people launching new businesses in the state will be able to do so 100% tax-free for a period of 10 years.
Yep. That means no income tax, no business tax, no state or local taxes as well as no sales and property tax.
It’s all part of cementing the city as being the hub for technology startups on the opposite side of the country from Silicon Valley. Or so it seems at face value.
The initiative is about providing incentives to new ventures, encouraging them to work in certain locations around the city. It also encourages startups to form affiliate partnerships with both public and private universities, as well as community and private colleges – by working within the campuses or close by in the areas laid out in the plan. Some universities also own various properties around the city which are included under the scheme.
The program has been running since January of this year, but right now it is attracting a lot of international attention from entrepreneurs that are entertaining the idea of moving to New York or building their startup from scratch in New York.
There is a strict eligibility criteria for startups hoping to be involved. All ventures must fit into the classification of being a ‘high growth technology’ based business. All startups are required to create new jobs as well, so solo businesses don’t fit the criteria.
Given the youth unemployment crisis discussed at the G20 Young Entrepreneurs conference held in Sydney nine days ago, initiatives that encourage businesses to work so intimately with young graduates and also incentivise youth financially to work in a startup environment is one very positive step in helping to solve this unemployment issue and also give students cashflow to start paying back their loans – a massive problem facing younger generation Americans.
The other major point that needs to be made here is that new businesses under the scheme can not be located in an area where they would potentially compete with small business operations in that area. This is quite possibly why Governor Cuomo went with the ‘high technology’ option, in order to protect the interests of existing businesses across the city.
At the moment, local and state governments have launched a number of initiatives and partnerships with the startup community in regards to making it easier for the ecosystem to flourish. These have mainly been around giving startups access to cheaper or subsidised work spaces. Yesterday, at the launch of Start Up Australia, co-founder Brian Sher also mentioned government-owned entity Australia Post having excess space that they are not using and their openness in looking at how they can work with new businesses in order to make things easier for entrepreneurs who are seeking to build new ventures.
I am not exactly sure that our government would go for the whole ‘tax free’ style initiative, but if they are serious about tackling the issue of youth unemployment, some initiatives around making it easier to hire staff and encouraging jobseekers to consider startups as a serious opportunity would be most welcomed in the space.