Tax increases being aggressively promoted by unions would undermine New York's business climate and threaten the foundations of the state's free-market economy, a key New York State political leader has warned state lawmakers.

Union demonstrations promoting tax increases are powerful-"but the sound of businesses closing is deafening," Michael R. Long, state chairman of New York's Conservative Party, wrote in a letter to all legislators that was released April 4.

"The cost of running a business in New York State is at its saturation point," Long wrote. "Businesses and individuals simply cannot afford another tax."

Long's letter echoed data and arguments advanced in recent weeks by The Business Council and its research affiliate, The Public Policy Institute.

Unions have proposed a package or tax increases they are marketing as "closing loopholes." These proposals would:

• Create of a new alternative minimum tax on corporations' gross receipts.
  
  
• Enact worldwide combination reporting, which would require companies' taxes to consider profits earned by subsidiaries in other states or countries.
  
  
• Slow the pace at which companies could write off the expense of major capital investments.
  
  
• Increase the state's personal income tax, which would affect thousands of small businesses that pay business taxes through the personal income tax.
  
  
• Create a new tax on health care by requiring employers to either provide health care or pay a tax to support state health-care costs. This tax enacted in Massachusetts during the Dukakis but was so controversial that it was never implemented.

Unions mounting successful demonstrations in Albany support of their demands, Long wrote, are "certainly hard to ignore, even harder to say no to. However, being an elected official, one has to consider all of the facts and one has to make the tough choices."

He noted, for example, that:

• New York's state and local taxes on corporate profits are already third highest in the nation, 82 percent higher than the national average.
  
  
• New York's combined state and local corporate income taxes are second highest in the nation on a per-capita basis.
  
  
• Personal income tax are second highest in the nation, 68 percent above average.

"To ask small businesses or even the larger corporations to pay more to satisfy the wants of demanding public employee unions indicates to me that New York State's economy would no longer be one based on a 'free-market', rather it would be based on a socialistic economy," Long wrote.

He noted that a multi-year tax cut enacted in 1987 had positive economic effects-until the recession of 1989 prompted lawmakers into deferring scheduled cuts, imposing a draconian 15 percent corporate surcharge, and raising other taxes.

"The result: nearly 275,000 private-sector jobs eliminated in 1991 and 80,000 the following year," Long wrote. "New York's recession lasted longer than the nation's because businesses were not willing to invest in a state that raised the cost of doing business.

"You cannot afford to make the same mistake."