For Release — Wednesday, February 15, 2006
COUNCIL REMINDS LAWMAKERS THAT TAX CUTS HAVE SPURRED
JOB GROWTH IN THE PAST—AND CAN DELIVER THE SAME BENEFITS AGAIN
ALBANY—The state has improved its job growth in the past by reducing the tax burden on New Yorkers, and a current job-growth record that is only about half as good as the nation's should prompt state lawmakers to reduce taxes again, Daniel B. Walsh, president/CEO of The Business Council, said in legislative testimony today.
“Because you cut taxes, working people are better off. Let’s keep it up,” Walsh told the Senate Finance Committee and the Assembly Ways and Means Committee at an Albany hearing.
Walsh noted that much has changed since the early 1990s, when “it was still acceptable to deny that New York had economic problems significantly different from those of other states.
“The suggestion was that, if we were losing jobs, it was only because the national economy was not doing well. There were bitter debates over whether the nation’s highest taxes, and other high business costs, made it harder for working people here to find good jobs.”
Today, in contrast, it is widely recognized that New York’s high taxes and high job-creation costs have slowed the pace of job creation compared to other states, Walsh noted. And since 1994, he added, the state Legislature and Governor Pataki have made New York more competitive by reducing personal income taxes, business taxes, and other taxes.
He cited the Bruno-Morelle initiative in 1994 that led to elimination of the 15 percent corporate tax surcharge.
“In the five years before that happened, New York had lost 443,000 jobs,” the testimony said. “Since then, as you and Governor Pataki have cut taxes, we’ve gained 762,000 jobs. Quite a turnaround.”
Nonetheless today's job-growth rate in New York is only about half as good as the nation's, and the state has still not regained all the jobs lost in the 2001 recession and the Sept. 11 atrocity.
Walsh urged lawmakers to take several specific actions:
- Support Governor Pataki's business tax-cut plan.
“Allowing for the immediate expensing of depreciable assets and repealing the corporate alternative minimum taxes would jump-start investment in New York by significantly reducing the cost of capital invested in the state,” Walsh said. New York attracted only 3.6 percent of nationwide manufacturing investment in 2004, much less than New York's share of population, gross domestic product, or existing manufacturing employment, he added.
- Support Senate Majority Leader Joseph Bruno's proposal to eliminate the corporate franchise tax and personal-income tax on manufacturers. “That visionary proposal would show corporate decision-makers that New York truly is changing for the better. It is part of an overall business-assistance package totaling more than $3 billion, an amount that truly makes people sit up and take notice," Walsh said.
- Invest in the innovation-based economy that will be New York’s future by supporting merit scholarships for math and science majors who commit to becoming teachers and giving private-sector leaders in each region of the state more say in how the state’s economic-development dollars are invested.
- Repeal the state-level estate tax, which has resurfaced as a result
of elimination of a federal credit on state-level estate taxes.
“Elimination of the federal credit for state-level taxes means that New York estates now pay tax of up to 16 percent. In Florida, South Carolina and some 25 other states, a successful individual can leave a family business or other assets with no state-level tax at all,” the testimony said. “Lawyers, accountants and other professionals routinely advise their clients to move away and take their assets with them. When that happens, we not only lose some of our most productive individuals, and the charitable and other contributions they make to the community. We lose the income tax and sales tax those individuals would produce in New York. We want them to stay, and pay taxes, here in New York."
- Encourage rapid deployment of broadband by exempting new installations of fiber-optic cable by telecommunications companies from local property taxes for a long enough period to allow an appropriate return on these costly investments. Walsh suggested an eight-year exemption and phase-in of local property tax over the succeeding five years.
- Help businesses and homeowners who pay property taxes by addressing the causes of spending that drive those taxes ever upward. In particular, he urged lawmakers to: repeal the Wicks Law, which inflates the cost of public construction projects undertaken by local governments and school districts; reform binding arbitration; create a local-option property-tax cap; expand the School Property Tax Report Card; and support ideas advanced by the Senate Majority and the Governor governing school-district spending and measures to encourage municipal consolidation and shared services.
- Ease other high costs of job creation by enacting workers’ compensation reforms proposed by Governor Pataki
- Ease costs of health insurance by authorizing Freedom Health Plans, which give employers more options to offer less costly health-insurance plans to their employees.
- Enact debt reforms proposed by state Comptroller Alan Hevesi, including a constitutional limit on debt
- Enact a taxpayers’ bill of rights (TABOR) to limit future spending increases to a level the taxpayers can afford.