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February 22, 2005

Unions, spending interests propose raising taxes by up to $10 billion

A coalition of labor unions and advocates of higher taxing and spending is urging state lawmakers to increase taxes in New York State by as much as $10 billion a year.

The proposal includes an increase of as much as $7.7 billion in the state's personal-income tax as well as increases in business taxes and fees of at least $1.5 billion.

“New York State has the nation’s highest tax burden by far, and we’re paying dearly for it,” said Daniel B. Walsh, president/CEO of The Business Council. “That’s why our most recent one-year job-growth rate is less than half the nation's—and Upstate's is less than one-eighth the nation's."

“Businesses and advocates for fiscal common sense across the state must make their voices loud and clear to lawmakers in Albany,” Walsh added. “We have enough problems with high taxes. We must not raise taxes. Instead, we must reduce spending and reduce taxes at all levels of government.”

The latest study of state tax burdens, by the Federal Reserve Bank of Boston, found that the tax burden on New York’s businesses and workers was the highest in the nation by far, and 43 percent above average. The Fed study also found that social needs do not appear to explain the heavier tax burden in New York.

The tax-and-spend advocacy groups announced their new call for higher taxes at a February 17, press conference in Albany. Participants in the pro-tax initiative include: a union representing government workers, the Public Employees Federation; a teachers’ union, New York State United Teachers (NYSUT); the Fiscal Policy Institute (FPI), which receives funding from unions and left-of-center foundations; a pro-spending advocacy group called the Statewide Emergency Network for Social and Economic Security; and the Sierra Club.

The group’s news release provided only sketchy details on its tax-increase proposals, but the impact on businesses would be severe. The proposed increase in the personal income tax would also hit businesses hard because many smaller and closely held businesses pay their business income taxes through their owners' personal income-tax returns.

The proposed business-tax increase of $1 billion was described as “closing corporate tax loopholes. The proposal was strongly reminiscent of similar releases in previous years in which some of these same spending advocates recommended that New York adopt the notorious “New Jersey Plan”of tax increases.

Those tax increases were dubbed the New Jersey Plan because they are modeled after tax increases enacted several years ago in New Jersey. Those proposals included:

The advocates’ release also provided few specifics on its other proposals, which include: