Momentum Builds for New York Code Changes With Rate Cuts: Taxes

Support is growing for revisions to the New York state tax code including rate cuts, with Democratic Governor Andrew M. Cuomo and Republican legislative leaders proposing changes to every major levy in the state.

Measures may be introduced when the New York legislature convenes in early 2014, an election year for Cuomo and all the state’s lawmakers. The New York State Tax Reform and Fairness Commission, appointed by the governor, already has proposed tax-code changes. A second Cuomo panel, the New York State Tax Relief Commission, plans to offer by Dec. 6 its tax-cut ideas.

Senate Republican Leader Dean Skelos of Long Island, the chamber’s co-majority leader, last month released a report calling for an estimated $11 billion in tax cuts over four years. Assembly Minority Leader Brian M. Kolb, a Republican from Canandaigua, recently sent a letter to the tax relief panel that includes more than 14 proposed code changes and cuts in personal income, business and other taxes.

“Tax reform momentum” is building for next year, Kenneth Pokalsky, vice president of government affairs at the Business Council of New York State, said in a statement. Many of the measures proposed in the state Senate report were priorities for the Business Council, he said.

The Business Council represents a range of companies. Its board of directors includes executives from National Fuel Gas Co., Delta Air Lines Inc., Consolidated Edison Inc., Xerox Corp., International Business Machine Corp., and Corning Inc.

Property Tax

Cuomo, in a conference call last week with reporters, said his primary focus in 2014 will be to reduce property and business taxes because the state already made major changes to the personal income tax in 2012.

“I’m interested in property tax reform and business tax reform, as we go forward,” he said.

“The No. 1 tax in this state is the property tax,” Cuomo said. “It’s the most oppressive tax that New Yorkers pay. So that’s why we’re going to focus on that.”

Cuomo earlier this year negotiated with lawmakers a 2014 budget that provides about $1.1 billion in tax cuts and credits to businesses and middle-income families, phased in by 2016. The credits will be partly paid for by an extension of a tax surcharge on couples earning more than $2 million a year. The surcharge, set to expire in 2014, was extended for three years.

Cuomo, up for re-election next November, has worked with lawmakers over the past three years to close more than $13 billion in budget gaps.

Spending Cap

The report from Skelos that looks ahead to further changes proposed a Tax Freedom Fund, which would be tied to a permanent 2 percent cap on state spending. Money not spent because of the cap -- estimated at $11 billion over four years -- would be used to fund tax cuts.

The report proposed creation of an optional simplified personal income tax return, with income calculations based on the federal adjusted gross income plus only one adjustment for government pension income. It recommended elimination of the minimum tax for both personal income and corporate income.

Other recommendations included eliminating the corporate tax on manufacturers, across-the-board reductions in corporate tax rates and ending the stock transfer tax.

“We are proposing a plan to greatly reduce the tax burden on New Yorkers at every level, making it more competitive for businesses to locate and grow here,” Skelos said in a statement.

Commuter Tax

Kolb, in his proposals, called for reducing the corporate franchise tax to 6.85 percent from 7.1 percent, creating a new tax break for start-up businesses, repealing the state’s commuter tax in the New York City area, and eliminating the sales tax on gasoline.

Cuomo created the Tax Reform and Fairness Commission last year with a mission to propose ways to make the state’s tax code simpler, more efficient and more equitable. The panel’s recommendations are supposed to be revenue-neutral, meaning the measures won’t change the amount that lands in state coffers.

The panel in a Nov. 14 report to Cuomo said the state should end a sales-tax exemption for less-expensive shoes and clothes to cover tax reductions for low- and middle-income residents and property owners. Ending the exemption on clothing and footwear that costs less than $110 would raise $800 million a year, the commission said.

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