For Release — Wednesday, March 26, 2003
REPORT: BUSINESS PAYS ONE IN THREE TAX DOLLARS
IN NEW YORK STATE
Charges that business pays too little 'misunderstand or misrepresent' reality
ALBANYBusinesses pay more than a third of all tax revenues collected by the state and local governments in New York, a new report by The Public Policy Institute shows.
Public-employee unions and union-supported advocates who argue that business in New York does not pay its fair share of taxes are either misunderstanding or deliberately misrepresenting how businesses are taxed, the report adds.
The report is called A Fair Share-At Least! The Public Policy Institute, the research affiliate of The Business Council, released the report today. The full report is posted at www.ppinys.org/reports/2003/fairshare03.pdf.
"New York's high taxes still kill jobs," said Business Council President Daniel B. Walsh. "Recent state tax cuts have moved us in the right direction. But the fantasy that business pays less than its fair share is bogus. And, if this notion lulls lawmakers into a false comfort with returning to the high-tax folly of the past, it's dangerous, too."
Walsh was joined at a press conference at which the report was released by Robert Ward, director of research for The Institute and author of the report, and leaders of several regional business associations from around New York State.
"Most of the claims that employers don't pay their fair share are based on a misunderstanding-or outright misrepresentation-of how businesses are taxed," the report says. It cites an argument raised often by the Fiscal Policy Institute, which is funded by unions and liberal foundations, that uses state corporate income tax revenues to measure businesses' contributions.
"But at $1.8 billion or so, the state corporate income tax accounts for only about one-sixteenth of the total taxes paid by business," the report says.
"A careful analysis shows that business taxpayers will pay more than $10.5 billion to support education, health care, transportation, and other services funded through the state budget in fiscal 2003-04," the report adds.
"At the local level, businesses will contribute even more-some $19.9 billion, including $6.6 billion in school taxes alone."
All told, businesses statewide will pay almost $30.5 billion in state and local taxes, more than 34 percent of total tax collections this year.
Businesses in New York State pay not only the state's corporate income tax, but also taxes imposed on specific sectors. The energy industry, the telecommunications industry, the petroleum industry, the trucking industry, banks, and insurers all pay different taxes, the report notes.
Businesses also pay state and local sales taxes on equipment and countless other purchases. And some 280,000 mostly small businesses pay state and city income tax through personal income tax returns filed by their owners.
All told, businesses pay about one of four dollars collected by the state government, and more than 41 percent of property taxes raised by municipalities and schools. "The burden is even higher in New York City, where business pays 51 percent of property taxes, and pays a corporate income tax and various other city-specific taxes as well," the report says.
Although it is difficult to compare overall tax burdens from state to state, the most comprehensive effort to do that shows New York with the third-highest total burden, the report noted.
Economists at the Federal Reserve Bank of Boston last fall used a "representative tax system" to calculate, using 1997 data, each state's "tax effort"-that is, how much the state and its localities collect in taxes compared to what the state's economy can afford to support.
"By this measure, according to the Federal Reserve economists, New York's state and local taxes on corporate profits were the third-highest among all states, and 82 percent higher than the national average," the report said.
"New York has cut corporate taxes since then, but not so dramatically as to wipe out the disparity with other states," A Fair Share notes. "U.S. Census Data for fiscal 2000 show New York's combined state and local corporate income taxes were second-highest in the nation on a per-capita basis.
"Other taxes that fall heavily on employers tend to be much higher in New York than other states," the Census Bureau has reported. "For instance, our property-tax burden was second-highest in the nation, 52 percent higher than average; our personal-income taxes were second-highest, 68 percent above average."
Regional business leaders in New York State strongly support restraint in spending and taxing.
"New York City should know as well as any city the perils of too much spending and too much taxing," said Nancy Ploeger, president of the Manhattan Chamber of Commerce. "From 1969 to 1977, private employers in New York City lost two-thirds of a million jobsmore than the entire population of Boston or New Orleanseven as payrolls nationwide grew by 10 million. Thousands of our neighbors were forced to flee the city in search of opportunity. The city's budget problems were only one symptom of much broader damage to our entire metropolitan economy."
"We see nothing fair in the fact that New York's State and local taxes on corporate profits are 82 percent higher than the national average," said Randy Wolken, president of the Manufacturing Association Central New York (MACNY). "One has to wonder if the goal of some special interest groups is to tax New York manufacturers into extinction. Lets not repeat the job killing tax mistakes of the early '90s that led to the loss of hundreds of thousands of jobs."
"The last thing businesses in the Mohawk Valley need is a state budget that further burdens business taxpayers," said Jim Roche, president of the Mohawk Valley Chamber of Commerce. "New York's total state and local tax burden is among the nation's highest already, even after major state tax cuts in recent years."