APRIL 1998Legislative conferees agree to major tax-cut package
Includes Council's priorities of reductions in broad rate, AMT; total is $743 million
Legislative leaders meeting as the General Budget Conference Committee agreed Thursday afternoon to a major package of business tax cuts including reduction in the broad-based corporate tax rate and the alternative minimum tax, expan-sion of the investment tax credit to the securities industry, and reduction of the truck mileage tax.
The package is worth $743 million when fully effective.
On the motion of Speaker Silver, the general conference committee sent the package to the Subcommittee on Taxes and Economic Development to determine specific language and phase-in schedules for the various elements. Senator Bruno said the period would be up to four years (as in the original Senate Majority package). There was no immediate estimate on the dollar value in the 1998-99 fiscal year.
"The conference committee's action means another giant step forward in the drive to make New York competitive," said Business Council President Daniel B. Walsh. "We will gain thousands of jobs as a direct result of this historic agreement.
"Senator Bruno and the Senate Majority brought tax cuts to the table with a truly significant package of business tax cuts. Speaker Silver and the Assembly Majority responded with a major package of their own," Walsh said. "Senator Connor and Assemblyman Faso, and their conferences, contributed as well.
"After the Pataki personal income tax cuts, and the other tax cuts of the past four years, we can truly say New York is becoming competitive."
The elements of the package, and the estimated annual savings to taxpayers when fully effective, are:
. Reduction of the corporate income tax rate to 7.5 percent, $250 million.
. Reduction of the AMT to 3 percent, $40 million.
. Extension of the ITC to the securities industry, $50 million.
. Repeal of the Subchapter S differential, $55 million.
. Reduction of the fixed-dollar minimum tax, $29 million.
. High-tech tax credits for small businesses, $20 million.
. Reduction of the truck mileage tax, $36 million.
. Estate tax conformance with the federal exemption for family- business assets, $4 million.
. Increased exemption of clothing from the sales tax, $105 million.
. Sales tax on coin phones, $8 million.
. Sales tax on college textbooks, $21 million.
. Sales tax on telephone central office equipment, $3 million.
. Reduction of automobile registration fees for non-commercial vehicles, $67 million.
. Refunds of automobile registration fees, $17 million.
. Reduction of the beer tax, $7 million.
. Acceleration of the reduction in the gross receipts tax on hospitals and nursing homes, unspecified amount.
. Enhancement of the child care credit, $50 million.
. Tax reduction for small farms, $7 million.
. Exemption of Holocaust reparations from income tax.
The package also includes acceleration of the STAR property-tax reductions for homeowners, the chief element of Governor Pataki's tax-cut agenda this year.
The conference committee extended its deliberations to Thursday, April 9. Subcommittees and the full committee are expected to continue negotiations on the timing of tax cuts, and spending details, in the coming week.
April 3, 1998