Gov. Andrew Cuomo says his proposal to reform and lower business taxes would produce significant job, income and economic benefits for the state.
The Business Council of New York State agrees with that, Vice President of Government Affairs Ken Pokalsky told the North Country Chamber of Commerce at a recent presentation.
He cited a report issued by the Public Policy Institute of New York State in mid January that found restructuring the tax code and that lowering the basic tax rate would produce 14,000 new jobs by 2019, a figure expected to grow to 18,000 by 2024.
The study also showed in-state personal income would increase by $1.3 billion by 2019 and $2.1 billion by 2024. The measures would also lead to $500 million to $800 million in new private sector investments, it says.
Pokalsky said the new package of tax reform does more to improve the overall business climate in the state, noting that, previously, the state focused on programs and benefits that were available to only a narrow band of businesses.
Elimination of the 2 percent Temporary Utility Assessment for industrial customers, originally scheduled for March 2017, would take effect for the next fiscal year, in the governor’s plan.
“This (assessment) is recognized as having a detrimental impact on energy-intensive industries,” Pokalsky said.
Cuomo’s plan also calls for a speedier phaseout of the assessment for all businesses and residents. That is expected to save those who pay it, collectively, about $600 million during the next three years.
New York is one of only four states with separate corporate franchise and bank taxes. The governor’s budget contains a proposal to fold the bank tax into the corporate franchise tax, which would simplify accounting procedures.
In addition, the tax rate would be decreased to 6.5 percent from 7.1 percent for the more than 300,000 corporate entities in the state. The Governor’s Office has estimated this could provide businesses with $346 million in tax relief annually.
Manufactures would be eligible for a credit against corporate and personal income taxes of up to 20 percent of the amount they pay in real property taxes on their business.
In addition, upstate manufacturers would see their corporate income-tax rate drop from 5.9 percent to zero, which should be very beneficial in attracting investment, Pokalsky said.
North Country Chamber of Commerce President Garry Douglas said it is refreshing to see two top priorities addressed in the budget: tax relief and upstate economic development.
“The thrust of what’s on the table is very agreeable to us,” he said.
Estate-tax reform would see the exemption threshold increase from $1 million to $5.25 million. The current exclusion level is the lowest in the country, except for New Jersey, and is one of the main reasons so many older New Yorkers end up leaving the state, Pokalsky said.
The budget would freeze property taxes for two years, with two conditions.
In the first year, the state would provide tax rebates to homeowners with a qualifying income of $500,000 or less if they live in a taxing jurisdiction that complies with the state’s 2 percent property-tax cap.
For the second year, the municipality must continue to stay under the tax cap and develop a plan to increase efficiency through measures, such as shared services, that generate a savings of at least 3 percent of its tax levy.
The Governor’s Office estimates the two-year freeze could generate an annual tax benefit of $354 for 2.8 million homeowners.
Pokalsky said the Business Council neither supports nor opposes that proposal. Its members are concerned that it addresses only the symptom, not the underlying cause of state mandates.
Douglas said the chamber shares that position.
“We don’t want this to overshadow real mandate relief,” he said.
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