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New York State: Getting a jump on Start-Up

July 30, 2014

On the day County Executive Vince Horrigan touted the Start Up New York program on the Chautauqua County Industrial Development Agency web site in his weekly Monday Morning Memo, the state’s......

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Escapee

Jul-31-14 12:06 PM

Bob goes to Ralph’s gas station with his $.19 to buy gas at $3.50/gallon.

$.19 for gas: - $.424/gal fed tax - $.2465/gal state tax nets $.16 that buys gas from Ralph

$.16 spent on gas at Ralph’s: -80% (20% mark-up) for inventory -5% expenses nets $.02 earned value for Ralph.

So, for each dollar earned and spent in a community, Joe got a $.77 widget, Bob earned $.19, and Ralph got $.02, that’s a total of $0.98 with $0.02 left to accumulate even more profits as it is passed on.

That’s my estimate of the value to the community of Joe’s labor. The idea that it is multiplied many times as the dollar passes through the community seems to me to be either a myth or an out-right lie. I don’t pretend to be an expert in economics, perhaps Steiner could set us straight ;)

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Escapee

Jul-31-14 12:05 PM

Christopher: I appreciate the rational response. Here’s my attempt to track Joe’s payroll dollar into the community.

$1 of a day’s pay for Joe: -12% fed tax – 5% state tax nets $.83 cash into Joe’s pocket.

Joe spends $.83 at Bob’s in Dunkirk, -7.5% tax nets $.77 for goods and services

Bob’s widgets retail for $.77 each, -50% markup -25% cost of operations nets $.19 for Bob.

So after the first payroll dollar is spent, Joe got a $.77 widget, and Bob earned $.19

In the next comment; Bob goes to Ralph’s gas station

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Christopher

Jul-30-14 7:55 PM

You aren't talking about the same thing Escapee. What I mean is I spend a dollar at Bob's place. Bob spends that dollar at Ralph's place. Ralph spends that dollar at Bill's place. SUPPOSEDLY, that dollar will hit 8 or 10 places. I'm not so sure of that, and said so. But, using your figure and a rather pedestrian wage of $15 per hour, and that IS a pedestrian wage, than using your figures, those 659 jobs totaling roughly 20.5 million dollars still translates to $41 million and for 10 years so I'd say an $80 million investment returning $410 million over that 10 years is a pretty darned good return. The unfortunate thing are the people who actually believe that a pay scale of $15 per hour is a "good wage". No, it's barely above the poverty line, won't allow for a home purchase or many other large purchases, it's a subsistence wage, period. After taxes and purchasing health insurance, not much left, is there?

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Escapee

Jul-30-14 6:55 PM

Christopher: “each dollar spent in a community translates to $8”…

I’ve heard the “every $1 spent returns $2” argument many times, usually by someone who wants me to pay more so that they can spend more.

It never seems to work out for me. Perhaps it would work out better if I was on the receiving end of the spending rather than the paying end.

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Christopher

Jul-30-14 4:16 PM

Don't forget that gol darned Trucking Industry! Talk about being the root of all Evil!!!!

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tjefson

Jul-30-14 3:47 PM

Escapee, you nailed it. These freeloaders never think about the consequences of their gimmicks. Just like the people who are trapped here see their taxes increase as those able to escape leave each year. The only ones who want to stay are in the thriving public sector. These sponges soak up money like miracle wipes.

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Christopher

Jul-30-14 2:19 PM

NYS should cut Medicaid to the levels of a few other states, and use all of the savings for tax breaks, but ONLY if jobs are created!

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Christopher

Jul-30-14 1:09 PM

And why build a business when the tax break lasts only 10 years? Buffalo was already making progress, so it's a good place to invest for Photo Ops, the main reason ANY politician does ANYTHING! (Yes, Republigiggles too!) As for 80 Million for 10 million, if those 659 jobs pay perhaps $15 bucks per hour, that translates to $20.5 million. If the economic truism that each dollar spent in a community translates to $8, and I've heard/read as much as $10, then thoise 659 jobs will translate to over $200 million ANNUALLY circulating throughout the community. I guess it depends n whether one wants facts or talking points to bash a particular politician. Just a few things to think about.

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Escapee

Jul-30-14 12:58 PM

As I see it: Buffalo has 8 new businesses not paying taxes. Competing against businesses that have to pay taxes and have paid taxes for years.

As a bonus: The people who have been working at the existing businesses and paying taxes all along, will be paying part of the $10 million cost of this program that brings in non-taxpaying businesses and now may be in direct competition with their employer.

It’s no wonder existing businesses are fleeing NYS like rats from a sinking ship. If high taxes are the problem, wouldn’t it make sense to lower taxes for all businesses rather than this Start-Up NY circus? A few new temporary jobs doesn’t make up for all the existing jobs that we are losing and the cost of the government administration to run this fiasco.

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tjefson

Jul-30-14 9:29 AM

Listen carefully and you can hear the famous Whispering Giant saying "Your screwed".

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PhilJulian

Jul-30-14 9:27 AM

Joew makes a good point. We are seeing progress in Buffalo with investment in the harbor front, medical corridor and downtown investment. I sometimes wonder that if Cuomo promotes investment in Buffalo he thinks he is promoting all of Western NewYork. Chautauqua County is not the same as Buffalo but we suffer from the same effect of excessive taxation. The state needs to do more to promote Chautauqua County. We have a lot to offer a new business but the road to growth and prosperity has to begin with government reform and consolidation. That means putting unions in their place but I don't see Cuomo doing that.

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joew

Jul-30-14 7:44 AM

What I find interesting is that the current ad campaign touting the "no taxes for 10 years" is running in Nevada. Nevada has no corporate income tax,no franchise tax,and no income tax.

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GeorgeB67

Jul-30-14 7:10 AM

Hang on a moment here. The state admitted spending 80 million taxpayer-funded dollars to get a $10 million investment from private industry.

659 jobs is nothing to sneeze at, for sure. But I am certain anyone could take $80 million and turn into $10 million.

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Christopher

Jul-30-14 6:28 AM

I'll say this, and that is comparing ourselves to Buffalo or any large urban area isn't a good start.

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