Category Archives: Taxes

Hammond gets it right

The Empire Center’s Bill Hammond has a terrific OpEd in today’s NY Post that echoes a message we’ve been saying for years: mainly, that New York has a problem with health taxes. From the OpEd:

“The habit hooked the state government 20 years ago this month, when the Health Care Reform Act took effect…

Over the 12 years from 2000 through 2011, lawmakers either hiked the HCRA taxes or created new ones 14 times — causing annual receipts to almost triple. The addiction had taken hold.

Including the nation’s heaviest state tax on cigarettes, HCRA now brings in $5.5 billion per year, making it the third-largest tax in the nation’s highest-taxed state.

Insidiously, the surcharges on health insurance are collected in ways that hide them from public view. Yet they add as much as 6.2 percent to a typical New York City resident’s insurance costs, compounding the pain of high premiums and deductibles.

One of the surcharges, known as the “covered lives assessment,” varies wildly from one part of the state to another. In 2016, it ranged from $10.24 per year in the Utica-Watertown region to $202.82 in New York City, a difference of 1,880 percent.”

The OpEd goes on from there, and we encourage to read it in full: http://nypost.com/2017/01/12/new-york-is-addicted-to-health-taxes/.

The Business Council will release our own legislative agenda next week, and you can be sure we will have more to say on HCRA when we do.

Weakening the tax cap?

We’ve made no secret of our support of the two percent Property Tax Cap, in our opinion, the tax cap – coupled with the self-imposed cap on state spending, have been the signature achievements of the Cuomo administration and have helped correct years of outrageous spending increases and rising property taxes. Despite these achievements, the voices calling for a weakening of the tax cap continue to grow louder.

In today’s Newsday, school officials are quoted as saying the two percent cap is putting the squeeze on their budgets, and they argue the two percent cap is really more like .2 percent, since inflation continues to be so low.

The change they are asking for is subtle, but substantive. They want lawmakers to make the tax cap a hard two percent, instead of currently capping increases at the lower of two percent, or the consumer price index (CPI). They say the lack of growth in the CPI is putting a strain on school budgets and forcing them to tighten their belts in ways the law never intended. It is our belief that the real “strain” does not come from the fact that the CPI has kept the tax increases significantly below two percent, it’s that municipalities continue to be held hostage by antiquated laws that make it far too easy for the teacher’s unions to achieve sizeable yearly pay increases well above the rate of inflation.

At a time when regular worker salaries remain stagnant, and overall economic growth is weak, it makes all the sense in the world that unions should play by the same rules. We hope lawmakers continue to recognize that the tax cap is a tremendous achievement and resist calls to weaken it.

Tax foundation out with new tax map

Just in time for tax day, the Tax Foundation is out with a new map highlighting the top marginal income tax rates in each state. It will come as no surprise to residents of New York State that we have among the highest top income tax rates in the country. In fact, only six states plus the District of Columbia rank higher.

Just in time for tax day, the Tax Foundation is out with a new map highlighting the top marginal income tax rates in each state. It will come as no surprise to residents of New York State that we have among the highest top income tax rates in the country. In fact, only six states plus the District of Columbia rank higher.
Top State Marginal Individual Income Tax Rates in 2015 (as of April 15, 2015)

In addition to the above map, the foundation’s page has some really great information broken down by state.

We encourage you to spend some time and check it out.

In statewide TV interview Business Council President and CEO analyzes Governor’s proposed budget

Business Council president and CEO Heather C. Briccetti, Esq. was a recent guest on the Time Warner Cable News interview program Capital Tonight. Host Liz Benjamin’s questions covered a range of issues starting with the Governor’s budget.

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Ms. Benjamin: “The Governor’s budget did seem to be a bit of a mixed bag for business. You have a wide range of members, what do they think of the proposals.”

“This budget represents another year of fiscal responsibility  and to The Business Council that’s a huge positive”

Ms. Briccetti: “There are a lot of positives and I always go back to controlling spending. I was just recently at a meeting of the heads of many of the state chambers of commerce from across the nation and in many cases they are dealing deficits in their states and going into a budget cycle looking at what are the least damaging taxes their states could raise. And we’re not in that position. To me that’s a testament to four consecutive years of spending control. Yes, some of the surplus that the state has is the result of settlements, but some of it the result of fiscal responsibility. This budget represents another year of fiscal responsibility  and to The Business Council that’s a huge positive because it alleviates the need to go looking for new revenue when business in the state is still trying to dig out of the recession.

“The bottom line is raising the minimum wage does not create jobs.”

On the Governor’s proposal to increase the minimum wage:
“The bottom line is raising the minimum wage does not create jobs. It is a disincentive to job creation. If you just look at U.S. Census data for 2013, which is the last year that is available, 60 percent of people who live in poverty don’t have a job. This [raising minimum wage] doesn’t do anything to assist them. In fact, it is counter-productive because it creates pressure on small business to eliminate jobs, because they can’t afford the increased cost of the new minimum wage. So I would argue, let the economy recover. Let the pressure to fill positions drive up wages, which is happening in other states. There are states that have a higher average weekly wage, but don’t have a higher minimum wage—they have the same minimum wage as the Federal government and wages are going up because they have full employment. The problem is that raising the minimum wage has been identified by supporters as a way to eliminate poverty and it is not. The way to end poverty is to create more jobs.”

“I think you have to look at the core issue of job creation.”

On competition-based upstate economic development:
“We support good projects, so I don’t think the alternative of saying ‘we’re just going to each region a fixed amount’ regardless of what kinds of projects they have in the works is a reasonable way to allocate economic development dollars. I think you have to look at economic development projects on kind of an individualized basis. Competition could  exclude good projects because overall that region’s plan isn’t as good as the one next to it would be unfortunate and we’d hate to see that happen.

I think some evaluation of the individual projects rather than the overall package that the region puts up would be good because sometimes they be tempted to add frills to make the package look shinier. And that is maybe unnecessary spending. I think you have to look at the core issue of job creation.”

If the problem is property taxes, then creating subsidies for select groups is not the answer because it doesn’t drive down taxes.”

On the Governor’s proposed property tax plan:
“If the problem is real property taxes and we would agree that it is. It’s the largest tax that most small businesses pay and businesses are the largest property taxpayers in the state. If the problem is property taxes, then creating subsidies for select groups is not the answer because it doesn’t drive down taxes. I think we need to take another hard look at mandate relief [for local government]. The property tax cap will take time but is a good and very effective tool in controlling the growth of property taxes. I agree with the Governor overall in his mission of consolidating layers of local government to start peeling away some of the unnecessary spending that drives up real property taxes, but there’s also a need for mandate relief. Let’s do scaffold law reform that is a substantial burden on everyone, every homeowner, every business, and every municipality.”

You can watch the entire interview here. Please note, a Time Warner Cable subscriber login is required.

New York’s corporate tax reform improves state business tax climate

The recently finalized FY 2014-2015 New York state budget includes major reforms to the state’s corporate income tax system and estate tax that will broaden the state’s tax bases, lower tax rates and reduce the complexity of New York’s flawed corporate tax code, according to a new report released by the Tax Foundation. The Business Council aggressively advocated for these tax reforms to be included in the final state budget. The Tax Foundation noted that if these reforms had been implemented prior to its evaluation of state tax laws in mid-2013, that New York’s corporate tax system would have ranked 4th best nationwide, behind only three states with no corporate income tax, instead of 25th.

“The Business Council helped shape, and strongly supported this reform package, knowing it would make New York’s business tax climate more competitive,” said Ken Pokalsky, vice president of government affairs for The Business Council of New York State. It is gratifying to see the state’s actions gaining national attention, as one of the most significant tax reform packages adopted by any state over the last year.”

The Tax Foundation report summarizes the elements of the lengthy bill, and its key findings include:

  • The four different tax bases for calculating corporate tax are reduced to three as of FY 2015 (eliminating the corporate AMT base) and further reduced to two over time (eliminating the capital stock base).
  • The corporate net income tax rate is reduced from 7.1 percent to 6.5 percent, the lowest level since 1968.
  • The duplicative bank tax system is merged into the better-developed corporate tax system.
  • The estate tax is recoupled over time to the higher federal threshold, exempting many small businesses from hefty taxes upon the death of their owners. The generation-skipping transfer tax is repealed.
  • Net operating losses are restructured to reduce uncertainty for taxpayers, NOL carrybacks are extended to three years, and the $10,000 cap is removed. NOL carryforwards remain twenty years, similar to federal law.
  • The individual add-on Minimum Tax is repealed.
  • If the changes enacted by the bill were in full effect for the most recent version of the State Business Tax Climate Index, New York’s corporate tax system would have ranked 4th best of the fifty states instead of 25th best.

 

In the 2014 State Business Tax Climate Index, which evaluated state tax laws as of July 1, 2013, New York’s corporate tax system ranked 25th best out of the fifty states, and the overall tax structure ranked 50th, or last. If the changes enacted by the bill were in full effect for the most recent version of the Index, New York’s corporate tax system would have instead ranked 4th best of the fifty states, behind only three states with no corporate income tax.

The state’s overall rank would have improved two spots to 48th, beating New Jersey and California. New York is not a low-tax state, and its economic success is because of strengths that overcome a challenging tax environment, with recent tax commission reports recommending many of the changes incorporated in the bill.

“New York is not a low-tax state, and its economic success is because of strengths that overcome a challenging tax environment. High taxes need not also be complex or poorly structured taxes, however, and removing these obstacles will encourage job creation and economic activity,” said Joseph Henchman, Tax Foundation Vice President of State Projects. “New York’s 2014 corporate tax reform is an impressive step toward tackling this problem by broadening bases, lowering rates, reducing burdens, and eliminating needless complexity.”

Read the full Tax Foundation analysis, New York Corporate Tax Overhaul Broadens Bases, Lowers Rates, and Reduces Complexity, on the Tax Foundation’s website.

 

Final New York state budget needs to grow jobs and economy

As the Governor and New York State Legislature progress in final budget negotiations, The Business Council of New York State, Inc. is calling for a final state budget that boost jobs and New York’s economy.

“Job creation and economic growth are key to building strong communities in New York,” said Heather C. Briccetti, Esq., president and CEO of The Business Council of New York State, Inc. “Continuing to restrain spending, implementing broad-based tax reform and mandate relief need to be a priority for a final state budget.”

The Council also debuted a new ad, “Help New York’s economy grow,” focusing on how tax cuts will help improve New York’s economy. Watch the ad below.

[youtube height=”HEIGHT” width=”WIDTH”]http://www.youtube.com/watch?v=K5XYdVo6UeQ&feature=youtu.be[/youtube]

Business Council Vice President of Government Affairs Ken Pokalsky’s letter to the editor was published in the Albany Times Union. Read his letter that outlines how increasing taxes won’t help create jobs in New York how tax cuts would help create a more competitive economic climate to generate good-paying jobs and healthier communities.

A study earlier this year by The Public Policy Institute of New York State, Inc. (PPI), “Analysis of Economic Impacts of New York Corporate Income Tax Reform,” showed that when the tax reforms are fully adopted, major business and employment sectors will grow including construction, trades and business service sectors, manufacturing, and financial services.

Among the other issues of concern to The Business Council in a final state budget: Paid Family Leave, Out-of-Network Mandates, Energy Tax, Campaign Finance Reform, Brownfields, and education and tourism funding. Read more on The Business Council’s website.

Bank tax reform will benefit New York

Last week a flurry of special interests took to the airwaves spreading misinformation about the business tax reforms proposed in the Executive Budget. Among the misinformation: that business tax reform, including bank tax reform, would significantly limit spending in the new state budget and that repealing the bank tax would only serve to pad the pockets of Wall Street. The truth is, business tax reform along with the other energy and estate tax reforms proposed in Governor Cuomo’s Executive Budget will help create much needed, good paying jobs in New York state and creating a more attractive business climate will help expand the middle class.

By merging the bank tax with the broader corporate franchise tax, companies will benefit from a simpler tax compliance structure. Imposing separate bank and corporate taxes somewhat unique to New York state, as the majority of other states, and the federal government, do not impose separate taxes. Easier compliance, in addition to eliminating provisions that currently penalize banks for keeping jobs and resources in New York, something that already exists for the general business community means New York will see a greater investment in jobs and the economy.

Creating this opportunity in New York needs to be a priority for the state and legislators in Albany. The banking sector may be improving, or even “doing well,” but New York’s share of U.S. employment in the financial sector has fallen since 1990. Banking jobs nation-wide have increased by 200,000 but New York’s share of those jobs has declined by 100,000.

The majority of the business tax reforms proposed in the Executive Budget have little or no impact on the FY 2015 spending plan now under negotiation, in fact, the bank tax would contribute to the budget in FY 2015 and the corporate franchise tax is actually projected to generate about $70 million more in more revenues in FY 2015. Even with the Governor’s proposed tax reform package, state spending is projected to grow by $8 billion in just three years while state tax-funded spending will grow by $5 billion.

Sustainable spending growth and reducing taxes to create economic growth, good jobs and strong communities needs to be a priority for New York

The Business Council supports the Governor’s budget proposal, including its broad based tax reforms, because it is part of a workable, sustainable long term spending plan for New York State.

Business Council Testimony on Executive Budget and Business Taxes

ken4The Business Council of New York State, Inc. presented testimony today outlining how the adoption of the Executive Budget’s business tax reform provisions will lower business tax burdens and produce significant job, income and economic benefits for the state.

“The strong economic impact of this tax reform package is due to tax reductions being targeted in industries with high economic multipliers, such as manufacturing, information, real estate and financial services, “said Kenneth Pokalsky, The Business Council’s vice president of government affairs.  “Our analysis shows that 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.”

The Business Council supports key tax reform measures including modernizing and restructuring the corporate franchise tax, reducing the corporate franchise tax rate to 6.5 percent, the adoption of a 20 percent real property tax credit for manufacturers statewide. These measures are projected to provide approximately $560 million in directly employer tax relief when fully implemented.

The Business Council also supports the enhanced phase-out of the 18-A, a utility surcharge tax that can costs a small manufacturer several thousand per month and cost a large, energy intensive manufacturer $10,000 per month or more.

“Business tax reductions in these industries have strong spillover effects that increase employment and economic activity throughout the state’s economy,” continued Pokalsky.

The Business Council encouraged the legislature to support the Governor’s business tax reform package.

Read The Business Council of New York State testimony online.

Tax policy experts propose ideal upstate business tax climate

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.

Governor’s budget would improve state’s business climate

Governor Andrew Cuomo’s executive budget proposal for the fiscal year that begins in April once again holds the growth in state spending below 2 percent. Under the plan, growth in state operating funds spending would be held to 1.7 percent. Growth in “all funds” spending, which includes federal dollars that flow to the state, would be held to just 1.3 percent — excluding “extraordinary” federal aid related to the rollout of the Affordable Care Act and recovery from Superstorm Sandy.

The budget includes cuts in spending for a number of state agencies: 11.2 percent or $519 million for the Department of Health (excluding Medicaid); 9.5 percent or $6 million at the Office of the Medicaid Inspector General; 13.4 percent or $35 million at the Department of Labor.

The budget reflects the tax reforms and reductions originally proposed in the Pataki-McCall tax commission—of which Heather C. Briccetti, Esq., president and CEO of The Business Council was a member—including a more rapid phase out of the 18-A energy assessment and the elimination of the assessment on industries.

Commenting on the executive budget, Ms. Briccetti said:

“The Business Council of New York State applauds the Governor’s continued commitment to improve the state’s business climate as demonstrated in his executive budget. There is much for business to be encouraged about with the emphasis on holding growth in overall state spending to under 2 percent while promoting private sector investments and job creation, and increasing in-state personal income, through broad-based business tax relief.

“Specific business tax reductions in the Governor’s tax package will have significant multiplier effects throughout the state’s economy, and will support more than 14,000 new jobs by 2019, and almost 18,000 new jobs by 2024, as noted in a recent Public Policy Institute report prepared by state tax experts at Ernst and Young.

“The Business Council looks forward to working with The Governor and Legislature to make tax relief and the removal of regulatory business barriers a reality for New York in this legislative session.”