APRIL 1998Governor Pataki will sign major new business tax cuts
Announces vetoes of $1.6 billion in spending and borrowing; calls for broader tax cuts
Governor Pataki announced he will sign into law the major new business tax cuts approved earlier this month by the Legislature, while vetoing $1.6 billion in proposed spending and borrowing.
Approval by the Governor, expected this week, means businesses in New York State will see the corporate income tax rate decline from 9 to 7.5 percent, along with other major tax reforms.
"The reduction in the corporate income tax rate is vitally important to all New Yorkers as we work to create jobs," Governor Pataki said. "This marks the largest corporate tax rate reduction in state history and the first rate cut in more than a decade."
The Governor noted that the broad-based rate reduction does not apply to the bank and insurance taxes, and said: "This must be corrected to ensure all competitors in that industry are treated equally and fairly."
The tax reductions will return $743 million a year to taxpayers-- including nearly $500 million to businesses--when fully effective.
The 7.5 percent rate will bring New York's corporate rate to its lowest level since 1970, and put the state's business tax rate squarely in the middle of those for all 50 states.
Other major tax reductions in the legislation that the Governor said he will sign include:
- Cutting the alternative minimum tax from 3.5 to 3.0 percent.
- Extending the investment tax credit to the securities industry.
- Reducing the truck mileage tax by 25 percent.
"Governor Pataki's action completes a once-in-a-generation improvement in our business tax competitiveness," Business Council President Daniel B. Walsh said.
"We salute Senator Bruno, Speaker Silver and their colleagues, as well as the Governor, for this historic achievement."
The Council will lobby for amendments to include banks and insurers in the rate reduction.
The Governor's Budget Division said the Legislature's budget included all-funds spending of $72.2 billion, more than $600 million higher than the Governor's proposal. The Senate estimated the legislative budget at $71.5 billion, slightly less than the Executive Budget. Some $400 million of the difference is in estimates of how much the state will need to spending on Medicaid this year.
The largest veto is an appropriation of $500 million for school construction that would have been paid for through borrowing. Other vetoes include several sections of legislative language that may become the subject of Constitutional challenge.
The vetoes are necessary "to protect taxpayers and keep New York on course," the Governor said. "We have turned the corner and we will not turn back."
Senate Majority Leader Bruno and Assembly Speaker Silver criticized the vetoes and said they will discuss possible next steps with their conferences.
- Click here for a Summary of Changes to Executive Budget prepared by the Department of Budget.
April 27, 1998