March 1, 2006
Senate issues revised tax-cut plan, upping proposed cuts to $8.4 billion; plan now includes educational tax credits
The Republican Senate Majority has strengthened its proposal to reduce New York’s tax burden, saying its revised plan would return $8.4 billion to property taxpayers, businesses, and energy consumers.
The Senate's plan includes a proposal to eliminate income taxes on manufacturers, saving them an estimated $600 million a year. It also includes a new proposal to create an education tax credit to offset parents' costs associated with educating their children. The Business Council strongly supports educational tax credits.
The Senate released its new tax-cut plan Tuesday along with a revised revenue projection for 2005-06. The Senate is now predicting a current year surplus of some $4 billion.
Business Council President Daniel B. Walsh hailed the proposal.
"The Senate Majority has always been a leader in efforts to reduce the heavy burden that taxes place on businesses and individuals in New York, and this proposal shows that the Senate is committed to continuing its strong record of tax reduction," Walsh said.
"As previous Senate tax-cutting initiatives have shown, cutting taxes on individuals and businesses helps New York add jobs. We are very gratified that the Senate wants to cut taxes and improve our job growth again."
Senate Majority Leader Joseph Bruno said, “The people expect us to be accountable in the budget process, they expect us to deliver a result that is on time and is responsive to the hardworking, overburdened taxpayers, especially in reducing real property taxes and helping businesses create and retain jobs.”
“The revenue forecast shows there are more than enough funds to return money to taxpayers through property tax cuts and tax reductions for businesses and energy costs, as well as to meet the needs of the state in education, health care and other areas,” he added.
Bruno said the Senate plan would save property taxpayers more than $2.8 billion, to be phased in over three years. Savings in 2006-07 would be $1.3 billion.
The Senate’s tax-cut proposals include:
- Elimination of income taxes on manufacturers, regardless of
size ($600 million).
- An educational tax credit to offset costs of attending another
public school or a qualified non-public school, or costs of tutoring
- An income-tax credit to help small businesses afford health
insurance costs for employees; and provide incentives to offer
health savings accounts and freedom policies ($1.7 billion).
- A new Small Business STAR program that would give property-tax
rebate checks to businesses that employ fewer than 50 people ($435
- A refundable tax credit to help small businesses with rising
energy costs ($350 million).
- Reforms of the corporate franchise tax ($60 million).
- Direct rebate checks to property taxpayers ($2.2 billion).
- Additional property tax relief savings provided by an annual
adjustment of STAR benefits to reflect increasing home values
- Adjustments to the personal income tax for middle-income taxpayers
- An expansion of the earned income tax credit (EITC), which stretches
the earned dollars of lower-income New Yorkers ($75 million).
- Elimination of supplemental personal income tax on small businesses
- A cap on the state sales tax on gasoline at $2 per gallon ($100 million).
The Senate cited a December 2005 report showing that New York’s local tax burden was the highest in the continental United States and more than twice the national average. The Senate release also noted that property taxes increased by 9.6 percent over the 1997-2002 period in New York, reflecting an increase in local government expenditures by 30 percent.
During that period, school tax levies alone have increased by an average annual rate of 7.7 percent since 2001, the release added.