March 1, 2001
Assembly Morelle introduces 'singles-sales factor' bill
Assemblyman Joseph D. Morelle (D-Monroe County) has introduced a bill (A.5317) to adopt the "single-sales factor" to calculate state corporate income taxes.
His bill would phase in the change over two years for manufacturers and biotech firms. When fully implemented, it would cut business taxes by more than $50 million, creating 32,000 new manufacturing jobs while increasing state revenues over the long term, Morelle said.
In January, Governor Pataki proposed applying the single-sales factor to manufacturers over five years. Earlier this month, Sen. Dean Skelos (R-Nassau County) introduced a bill to apply the single-sales factor to all businesses, effective immediately.
Assemblyman Morelle said his bill would cut business taxes by more than $50 million when fully implemented, and that it could create 32,000 new manufacturing jobs while increasing state revenues over the long term.
"This bill is necessary to spur manufacturing investment throughout New York, and will be particularly effective in reviving the upstate economy," he said.
Adopting the single-sales factor for all corporations is The Business Council's top tax priority for 2001, and Business Council President Daniel B. Walsh welcomed the proposal.
"New York's business community deeply appreciates Assemblyman Morelle's commitment to reducing New York's tax burden in a way that encourages job creation," Walsh said.
The single-sales factor would base corporate income taxes solely on a taxpayer's sales to in-state destinations. Now, state corporate income taxes are based on in-state sales, property, and payroll. The higher each factor, the higher the tax paid.
Because this formula includes in-state payroll and property, it has the effect of encouraging companies to put jobs and plants in other states, thereby reducing their New York taxes. Many states have begun revising their tax codes to increase the weighting of sales, or to make it the sole factor.
A study by The Public Policy Institute of New York State, The Council's research arm, found that applying the single-sales factor to all businesses would add 133,000 new jobs over three years while increasing state revenues.
Personal income-tax revenues that flowed from these jobs would more than offset estimate revenue losses created by use the single-sales factor.
If all businesses used the single-sales factor, New York would have a net gain in revenues of between $184 million and $247 million, the report concluded.
The PPI study is at www.ppinys.org/reports/2001/sglsales/sglsales.htm.