Government Affairs Albany Update
April 30, 2010
- Proposed Tax Credit Deferral Legislation
- Governor's Latest Gap Closing Plan
- Proposed Restrictions on Corporate Contributions
The Business Council is strongly opposed to this measure, as it would cut already-earned investment tax credits, Empire Zone credits and other credits that support new capital, jobs and other investments in the state, in addition to reducing by half the incentives available for new projects over the next three years.
We are looking to identify member companies that would be adversely impacted by this proposal to work with us in our advocacy efforts.
Its key provisions:
- Applies to taxable years beginning on or after 1/1/2010 and before 1/1/2013, and applies to most business tax credits (major exclusion is the film production credit.)
- Fifty percent of business tax credits “that otherwise would be used or refunded” during those tax years are deferred to and can be used in tax years beginning on or after 1/1/2013 and before 1/1/2016.
- The Department of Tax and Finance is authorized to develop implementing regulations, including rules on the extent to which deferred credits can be used in each future tax year.
- Estimated tax payments and first installment payments in 2010 thru 2012 would be made based on tax liability calculations as if this deferral was in place on the first day of the tax year.
- The bill applies to twenty-nine specified Article 9-A tax credits, and their counterpart credits in Articles 9, 22, 32 and 33, and to four additional credits that are specific to the corporation, personal income and insurance law. It includes the ITC, Empire Zone credits, brownfield credits, energy credits and others. The only major business credit excluded from this deferral legislation is the film production credit (under the Executive Budget, the cap on available film production tax credits would increase from $350 million to $420 million for the next five years.)
I would appreciate any feedback you have on this proposal, as we work to oppose and defeat this legislation.
The tax credit reductions discussed above are part of a $620 million package of additional budget gap reduction measures put forth by Governor Paterson this week. Other components of direct interest to Business Council members include:
- Eliminate Reimbursement for Timothy’s Law (2010-11 Savings: $40 million; 2011-12 Savings: $50 million): The remaining Timothy’s Law subsidy, paid directly to insurance companies and valued at approximately $30 per person annually for 1.6 million individuals, would be eliminated.
- Reduce NYSTAR Innovation Economy Matching Grants Program (2010-11 Savings: $19 million. 2011-12 Savings: $18 million): The Executive Budget recommended a $100 million appropriation to support a 10 percent State match to any New York-based research institution that successfully receives Federal research awards financed through the American Recovery and Reinvestment Act (ARRA). The original $100 million program would be reduced to $29.5 million.
- Increased taxes on Tobacco products (2010-11 Savings: $40 million; 2011-12 Savings: $40 million): The tax on chewing tobacco, cigars, pipe tobacco and rolling tobacco would be increased from 46 percent of wholesale price to 90 percent of the wholesale price. “Little cigars” would be taxed consistent with the proposed cigarette excise tax of $3.75 per pack, rather than the current rate of 46 percent of wholesale price.
- Reduced Sales Tax Vendor Credit (2010-11 Savings: $23 million; 2011-12 Savings: $23 million): The allowance currently provided to vendors that collect sales and use tax and remit with their timely filed and fully paid return would be eliminated for large vendors.
- Private Label Credit Cards (2010-11 Savings: $18 million; 2011-12 Savings: $18 million): This proposal would eliminate the ability for certain vendors, such as private label credit card lenders, to claim a sales tax refund from the State for debts that are not repaid, a practice prohibited for other lenders.
- Bank Bad Debt Deductions (2010-11 Savings: $15 million; 2011-12 Savings $15 million): Commercial banks with assets in excess of $500 million would be required to claim the actual amount of bad debt, rather than the amount set aside to cover such debt. This would couple large commercial banks to Federal provisions.
We welcome your input on these issues.
Legislation restricting corporate campaign contributions, and making other changes to state election law, are being pushed in the State Senate. Its Committee on Elections held public hearings on a package of bills last week, and then held a committee meeting on April 27th which resulted in four of the bills being reported to the Codes committee.
Two bills of particular concern to Business Council, and that were opposed by the Council, were held in Committee this week. These include:
- S.7083, which establishes the corporate political activity accountability to shareholders act which requires that corporate contributions to a political candidate or party committee or in support or opposition to a candidate or ballot referendum be approved by a majority of shareholders; applies to cooperative corporations, not-for-profit corporations, railroad and transportation corporations. Our memo in opposition is available here.
- S.7478 - Prohibits political contributions by businesses that have been awarded state contracts. Our memo in opposition is available here.
The last two bills were in response to the Supreme Court's recent decision in Citizen's United v. Federal Election Commission that eliminated federal restrictions on corporations' ability to expend corporate resources in support or opposition to political candidates, political parties and ballot referendums.
The bills that were reported were the following:
- S.743 - Relates to defining permissible personal use of campaign contributions; provides options for the disposition of unused campaign funds; prohibits certain state and legislative employees from accepting campaign contributions for election to state or federal office.
- S.900 - Requires the filing of additional transferor and contributor identification information in campaign receipt and expenditure statements for the receipt of amounts over one hundred dollars, including the occupation, employer and employer's address in the case of an individual, and the full name and address of any partnership, committee, association, corporation, labor organization or group of persons.
- S.5546 - Prohibits candidates from authorizing more than one political committee for any one election.
- S.7479 - Requires entities advertising for political purposes to disclose in such advertisements the source thereof.