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Government Affairs Albany Update

February 24, 2006

Manufacturers Tax Reform
Staff Contact: Ken Pokalsky

Assemblyman Robin Schimminger, chair of the Assembly Economic Development Committee, has introduced legislation to phase out corporate franchise taxation for manufacturers. The State Senate announced a similar proposal on February 8, but have yet to introduce specific bill language. Under the Assembly bill, A.10055, manufacturers would pay fifty percent of their Article 9-A tax liability for tax years beginning on or after January 1, 2006, and would be exempt from 9-A liability for 2007 and thereafter. The bill incorporates the existing ITC definition of manufacture (i.e., manufacturing, processing, assembling, refining, mining, extracting, farming, agriculture, horticulture, floriculture, viticulture or commercial fishing) and would require the business to receive more than fifty percent of their gross receipts from such activities to qualify. The Business Council strongly supports this approach, and has recommended a more broad definition of manufacturing that would specifically include nanotechnology, research and development, publishing and other categories. Click here for the bill text.