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Without our tax dollars upstate would quickly descend into Appalachian like conditions.
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It already has, for the most part.
But this isn't really about tax dollars going one place or another, but the high cost of government, that is passed on to private businesses. The NYC metro area can afford this because it is a World city that doesn't compete on price. Upstate has to compete with low-cost places down south.
Also, legislation like the Scaffold Law and current Brownfields regulations, make sense in NYC because land is very valuable. These same laws unnecessarily drive up the cost of construction and promote sprawl Upstate.
Please allow me to quote myself from
this related thread
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Upstate suffers economically because NYS is a high-cost place to do business. Everyone knows this. Companies leave the state to go to lower-cost locations, both in the USA and abroad.
NYC is by far the highest cost city in highest-cost state. So, why is it prospering?
It's simple, NYC does not have to compete on price.
NYC's economy and the jobs it generates are based on a few very unique industries: finance, media/entertainment, advertising, art, and fashion. These businesses are based in NYC because they have to be. Price is no object. Is Wall Street going to move to Charlotte? Will NBC move to Mexico? Are Ralph Lauren and Donna Karan going to pack up and move to Tennessee? Is Broadway going to relocate to Alabama?
Also, this unique nexus of finance, media, art, fashion and culture has a way of spinning off even more economic activity because of the wealth it creates. Wall street millionaires frequent art galleries. Media executives dress themselves in the latest designer fashions, etc. etc.
Unfortunately, Upstate exists at a distincly lower altitude and has to compete for any industrial development it can get, most often on price.
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I'll add that because of population distribution, Upstate has no political power whatsoever in Albany. (actually outside of the "Three men in a room" nobody has power in Albany, but that's a topic for another thread...). This population imbalance also ensures that Upstaters cannot get elected to Statewide office. The last elected governor of NYS from Upstate was Frank W. Higgins in 1905. In the last 50 years, only two upstaters have ever been elected to any statewide office: Dennis Vacco, Attorney General 1995-98 and Ned Regan, Comptroller, 1979-93. Both are from Buffalo.