Tax Reform Proposals

November 22, 2013
Contact: Ken Pokalsky

There are a number of tax reduction/reform proposals now on the table in New York State, and at least one additional report due (by 12/6/13) from Governor Cuomo's tax reduction commission.  The following provides an overview; please feel free to contact us if you would like additional details, or would like to discuss these proposals. Staff contact: ken.pokalsky@bcnys.org

Commission on Tax Reduction and Fairness

Key recommendations: endorse the Tax Department's draft corporate reform bill, with few major changes; limit several major business tax credit programs (film, brownfields and ITC); expedite phase-out of Article 18-A energy assessment; expand the sales tax base to additional categories of final sales to consumers; increase the estate tax exclusion to $3 million, and adopt a new state-level gift tax; reform real property tax administration; increase household and earned income credits, and adopt a residential RPT circuit breaker.  The report is available here. Note that some of this commission's recommendations were based on the need to produce a revenue neutral report. A report on business tax credits done for the commission was also made public, and is available here.  While it is critical of major business incentive programs, it mostly catalogues their costs, and does little to assess their economic impacts.

Senate Republicans

Their report on this summer's public hearing endorses: statutory 2% spending cap with excess revenues going to a tax reduction fund; required two-thirds majority vote for tax increases; corporate tax reform (similar to the Commission report); expedited 18-A phase-out; elimination of corporate franchise tax on manufacturers; conformance with federal estate tax; elimination of income tax on retirement income; simplified PIT calculation/filing; temporary real property tax relief; and additional tax reductions as excess revenues become available.

Assembly Republicans

Assembly Minority Leader Brian Kolb submitted recommendations to the Governor's Tax Reform Commission that supported: making current middle class PIT rates permanent; repealing the 18-A energy assessment; corporate rate reductions, and phase out of franchise tax liability for small business; eliminating state tax liability for manufacturers (including S-Corps); eliminating state sales tax on certain consumer items; tax credits for tuition payments and student loans.

Union counter-proposal on tax increases

A group of unions and union-backed organizations proposed: increased upper income PIT tax rates; an increase in the corporate franchise tax alternative minimum tax rate and closing of unspecified “loopholes;” reduce business tax credits and expand reporting on credit use; increase state aid to municipalities and increase state share of Medicaid and school spending to provide RPT “relief;” and adopt a RPT circuit breaker.