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Bigger surplus should mean bigger tax cuts, Bruno says

February 1998

Senate sees $2 billion balance; expands new tax-cut proposal to cover all businesses

State government will end the current fiscal year with a surplus around $2 billion, and that means more dollars should be returned to taxpayers, Senate Majority Leader Bruno said.

Expanding on a proposal first outlined in December, Senator Bruno and members of the Senate Majority Conference introduced legislation to cut taxes on businesses and families by $1.2 billion over four years.

The package would cut the corporate income tax rate from 9.0 to 6.85 percent; make the investment tax credit (ITC) more valuable by reducing the alternative minimum tax; extend the ITC to computer and telecommunications equipment used in the securities industry; create a new credit for medical savings accounts (MSAs); and enact other reforms.

"It is critically important that we be competitive with other states that are competing for jobs now in New York," Senator Bruno said.

The proposed legislation expands on the Senate's December plan by including banks and insurance companies in the general rate reduction, by cutting the truck mileage tax in half and by phasing out the petroleum tax on commercial heating oil and kero-jet fuel.

Designed to help individuals and small businesses cope with rising health insurance costs, MSAs let employers buy high-deductible health insurance policies and deposit the premium savings into tax deferred savings accounts for unreimbursed medical expenses.

The new Senate proposal would grant small businesses a refundable credit equal to 10 percent of the federal MSA deduction. The Business Council is strongly encouraging lawmakers to provide such incentives for MSAs.

"Senator Bruno's package is guaranteed to brings thousands of new jobs to New York," said Business Council President Daniel B. Walsh, who joined Senate leaders at a news conference to unveil the legislation. The Council is leading a statewide effort to win major new tax cuts this year.

February 26, 1998