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May 26, 2006

Tax commissioner: New York should get rid of the corporate tax

New York's corporate tax is a "Potemkin village" of high rates and complicated exemptions, and "the rational thing to do is to get rid of it," the state's commissioner of taxation and finance told the Business Council's annual Conference on State Taxation.

"Our laws are ridiculously complicated," Commissioner Andrew Eristoff said. "Our rates are ridiculously high."

"At $2.1 billion, today's Article 9-A tax contributes just 5 percent of our state revenue, yet it generates a disproportionate amount of tax-related heat and light," he said. "And its administration consumes a vast amount of public and private resources."

State leaders have created Empire Zones and other programs in an effort to make the business-tax burden "more reasonable," the commissioner said. But such targeted efforts may not always be the most effective way to promote stronger business and job growth, he said.

"A 'targeted tax cut' is really a politician's code phrase for delivering specified benefits to a defined constituency that can and will be appropriately grateful," he said.

The complicated nature of the current tax code means "it's very difficult to have an informed conversation about corporate tax policy," he said. "What's the consequence? There is no informed discussion about corporate tax policy."

A better approach would be to emphasize simplicity, lower rates, economic neutrality, and accountability, Eristoff said.

Decrying the lack of an organized constituency in favor of broad tax reform, the commissioner challenged the business community to provide leadership on state tax policy issues. He said the tax department will continue to improve its use of technology and other administrative practices to become "more efficient and taxpayer-friendly."