This Week in Government Affairs
January 6, 2014
In advance of Wednesday’s State of the State message, today Governor Cuomo announced a tax reduction and reform package that he would be proposing as part of his FY 2015 Executive Budget. His plan largely reflects the recommendations of the Pataki/McCall commission on which Business Council president Heather Briccetti served, and contains key provisions endorsed by the Council.
Highlights of today’s announcement included the following:
- merge the bank tax into the corporate franchise tax, reduce the general CFT rate to 6.5%, and make a number of reforms to the CFT.
- adopt a refundable corporate franchise tax credit for upstate manufacturers (outside the MTA region) equal to 20 percent of a firm’s annual real property taxes.
- phase-out CFT liability for manufacturers located in upstate (outside MTA region).
- repeal the stock transfer tax.
- accelerate the phase-out of the Section 18-A assessment electric, gas, water and steam utility bills, including an immediate repeal of the assessment for industrial customers.
Estate Tax Reforms
- Increase New York’s estate tax threshold to $5.25 million and lowering the top rate to 10 percent over four years, and beginning in 2019, the state estate tax exemption would equal the Federal exemption, which is indexed to inflation.
- adopt a two year freeze on property tax increases paid by homeowners (actually a state rebate of the increased taxes paid), within jurisdictions (outside of New York City) that stay below the 2% real property tax cap and that agree to implement a shared services or administrative consolidation plan.
- a permanent, enhanced real property tax circuit breaker that would become effective as the “freeze” phases out, applicable to households with up to $200,000 - again, applicable in jurisdictions outside of NYC that adhere to the 2% RPT cap. It would be administered as a refundable tax credit against the personal income tax.
- a renters’ tax credit applicable statewide for households with incomes below $100,000, through a refundable personal income tax credit that increases with family size.
While some of the proposed tax changes would be effective in 2014, it is likely that the business tax credits, including the corporate franchise tax reform package, would not be effective until 2015. We expect the legislative package, once released later this month, will include broad Article 9A reform, and will likely include additional proposals from the earlier tax reform commission, including some amendments to several business tax credits. We will continue to provide Business Council members with additional details as they become available.
Contact with Ken Pokalsky with questions or comments.