For Release — Tuesday, February 13, 2001
MORE TAX CUTS WILL PRODUCE STILL MORE
NEW JOBS, BUSINESS COUNCIL SAYS
ALBANYSince it started cutting taxes seven years ago, New York State "has never had it so good," and further tax reductions could protect the state's economy if the nation enters a recession, The Business Council of New York State told top legislators today.
"New York never had it so good as we have since we've been cutting taxes," Business Council Vice President Edward Reinfurt told the Senate Finance Committee and Assembly Ways and Means Committee. The committees were to conclude two weeks of hearings on Governor Pataki's proposed 2001-02 state budget today. (To read the complete testimony, visit www.bcnys.org/whatsnew/2001/0213btest.htm.)
Reinfurt pointed out that, 10 years ago this week, the fiscal committees began hearings on then-Governor Cuomo's 1991-92 Executive Budget. Then, the state faced a budget gap estimated at $6 billion. The enacted budget cut spending on many important programs and imposed $1 billion in new taxes.
Since then, Reinfurt said, the state has changed dramatically. Taxes have been cut every year since 1994, and for two years in a row New York has enjoyed job growth greater than the national average.
"Because you cut taxes, businesses in New York are creating more jobs," Reinfurt said. "And because of that growth, the dollars have been available for increases in school aid, expansion of Medicaid, and many other programs. We'd like to keep the economic momentum going."
The Business Council urged the Legislature to enact - on an accelerated timetable - two tax reforms Governor Pataki proposed as part of this year's budget.
One proposal would change the way businesses apportion income to various states for tax purposes. Currently, corporations are taxed in New York based on the proportion of their overall sales, property, and payroll that are in the state. The Business Council supports, and Governor Pataki has proposed, legislation to eliminate property and payroll so that corporate tax is applied based only on the "single-sales factor."
Such a change would eliminate the current system in which employers must pay more state tax when they add jobs or make capital investments in New York.
A recent study published by The Council's Public Policy Institute found that adoption of single-sales factor taxation in New York could result in an additional 133,000 jobs, including 32,000 in manufacturing, compared to what the state would experience otherwise. The new jobs would generate more personal income tax revenue than the state would "lose" in corporate tax, it said.
A second major proposal by Governor Pataki, and strongly endorsed by The Business Council, would repeal the state's alternative minimum tax. Thousands of manufacturers and other businesses across the state receive an investment tax credit when they make capital investments in New York. The alternative minimum tax weakens the investment tax credit by requiring companies to pay at least 2.5 percent of their New York taxable income in state tax, regardless of how much they invest in New York.
The result of the two changes, Reinfurt said, "would be a tax policy that rewards companies for investing and creating jobs in New York." He urged enactment of both reforms this year, to be fully effective in no more than two years.
"There is some evidence that the manufacturing sector is in a slowdown nationally," Reinfurt said. "We've heard of layoffs at some manufacturers around the country and here in New York. Let's make sure that if there are going to be more layoffs, we've done everything we can to make sure those do not happen in the Empire State. When the manufacturing sector is expanding again, let's make sure that we have done everything possible to get at least our fair share of the new growth and new jobs."
The Council also called for continuing tax reform in other areas, including the gross receipts tax on electric bills, property taxes on businesses, telecommunications taxes, property taxes on railroads and insurance taxes.
(To read the complete testimony, visit www.bcnys.org/whatsnew/2001/0213btest.htm.)