Tax policy experts from the Center for Governmental Research (CGR), Ernst & Young, the Tax Foundation, the Empire Center for Public Policy, Inc., and The Business Council of New York State, outlined steps to create the ideal tax climate for business in upstate New York, during a panel discussion hosted by The Public Policy Institute (PPI).
The panelists were, Robert Cline, national director, State & Local Tax Policy Economics, Ernst & Young; Joseph Henchman, vice president of Legal & State Projects, Tax Foundation; and Edmund J. McMahon, president, Empire Center for Public Policy, Inc. Kent Gardner, chief economist and chief research officer at CGR, opened the forum with an overview of the upstate economy. The panel was moderated by Ken Pokalsky, vice president of government affairs, for The Business Council.
Pokalsky challenged the panel to recommend the ideal business tax climate for upstate and it was clear from their presentations that the current tax climate is far the ideal.
Gardner opened the discussion with a profile of the upstate economy. He said that since the state has begun to recover from the 2008 recession, the majority of economic growth has been downstate, and the upstate economy continues to sputter. This is especially true in manufacturing jobs which have been flat since 2012.
The largest employers upstate are colleges and universities, and hospital health care systems. According to Gardner, the largest employers in Syracuse, Buffalo, Rochester and Binghamton all fall into those “eds and meds” categories. To view Gardner’s presentation, please click here.
Cline is the author of a study on the business tax reductions included in the Governor’s Executive Budget that found restructuring the tax code and lowering the basic tax rate would produce more than 14,000 new jobs by 2019, and almost 18,000 new jobs by 2024.
It also shows in-state personal income will increase by $1.3 billion by 2019, and $2.1 billion by 2024.
Cline said that economic models show as much as 70 percent of the tax savings that businesses get would return to households in the form employment opportunities and less costly goods and services.
McMahon, compared the tax climate of the states he described as most similar to upstate New York, including Pennsylvania, Ohio, Michigan, Indiana, Illinois and Wisconsin.
“Compared to the peer states highlighted above—focusing mainly on headline rates—upstate New York is furthest out of line in average taxation of high incomes and accumulated wealth, sales, and property of all kinds, in that order,” he said. To view McMahon’s presentation, please click here.
The Tax Foundation’s Henchman citied the widely reported Business Tax Climate index which places New York 50th overall among the states. His prescription for improving the state’s tax climate includes phasing out the top income tax rate, indexing income tax brackets for inflation, reducing the current four methods of calculating the corporate tax down to one and broadening the items included in the sales tax, and reducing the rate. He also supports the elimination of the state’s inheritance tax and favors making permanent the current temporary 2-percent cap on property taxes. To view The Tax Foundation presentation, please click To view The Tax Foundation presentation, please click here.
The panel discussion, held in Albany, was the first in a series of events convened by The Public Policy Institute as part of its year-long Opportunity Upstate project. Other topics for discussions in other parts of the state include education and workforce development, international trade, manufacturing and innovation. The project will conclude with a roadmap and a vision for a re-energized upstate economy to be presented at The Annual Meeting of the Business Council in September.