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November 21, 2000

Council: Let's make it eight straight years of tax cuts
Council's 2001 tax-cut agenda includes property taxes, 'single sales factor'

The Business Council has kicked off its campaign for further tax reduction in a letter to Governor Pataki outlining The Council's tax-cut agenda for 2001.

"The giant steps that you have taken over the past six years to make New York's taxes more competitive are paying off in thousands of new jobs and billions of dollars in business investment," Business Council President Daniel B. Walsh said in a Nov. 2 letter to the Governor.

"We've made enormous progress, but our competitors have not been sitting still," the letter said. Walsh quoted the Governor's own observation that New York can and must do more "to make our business climate even better, and to make our economy even stronger."

The Council's tax-cut agenda includes:

. Adopting the single-sales factor. The letter noted that, under current tax policy, a company with multi-state operations faces a higher tax bill in New York if it locates jobs and investment here.

For tax purposes, New York now allocates a company's income to this state based on three factors: in-state sales (which is counted twice), in-state payroll, and in-state property.

By basing corporate taxation solely on in-state sales, New York can reward, rather than punish, employers that create jobs here, the letter said.

Walsh said adoption of the single-sales factor would generate 133,000 additional jobs in New York over several years.

. Reducing property taxes by expanding the STAR program. Property taxes remain New York's single biggest competitive disadvantage, and many employers' property taxes are going up even as the state has been reducing its own tax burden, the letter said.

Expanding STAR to businesses with a school-tax reduction of 10 percent or more, at a statewide cost of $500 million a year, would both improve the fairness of property taxes and improve significantly the state's competitiveness.

. Accelerating energy-tax reductions. Energy-tax cuts enacted earlier this year will help reduce New York's energy costs, but several key components of the cuts will not take full effect until 2005. With energy costs in New York rising, receipts from these energy taxes will increase, so the state can afford to accelerate their repeal, the letter said.

. Telecommunications tax reform. The Council is urging lawmakers to continue working to update taxes on the telecommunications industry to reflect changes in that industry and its importance to New York State.

. Reform of property taxes on rail carriers. The Council is urging reduction in the disproportionate rate of property taxation on railroads because the current punitive property tax treatment of railroads makes upgrading rail service prohibitively expensive, the letter said.

The Council is also urging lawmakers to:

. Apply the state's investment tax credit to leased equipment.

. Strengthen the state's "Empire Zone" program to encourage economic development.

. Create a state tax credit for small employers who provide health insurance for their employees.