What's New

Zack Hutchins
Director of Communications

September 21, 2006

Faso calls for new tax cuts, Spitzer for workers' comp reforms, in remarks to Business Council

Republican gubernatorial candidate John Faso proposed major reductions in New York State’s income tax, and Democratic candidate Eliot Spitzer outlined proposals to reduce workers’ compensation costs, in remarks at the Business Council’s Annual Meeting.

Both candidates told Council members the state must improve its business climate dramatically, to strengthen its lagging position in the national and global economy.

Faso announced a new plan to cut the state’s personal income tax by 25 percent, or $7.5 billion annually. Under his plan, which would phase in over four years:

? Married couples earning up to $50,000, and individuals earning up to $25,000, would pay no income tax to Albany.

? The top income-tax rate would drop from 6.85 to 6.25 percent.

? A “recapture” provision on higher-income earners that adds nearly $1,000 to a typical income-tax bill would be eliminated.

? Tax brackets would be indexed to inflation, to avoid “bracket creep” that drives taxpayers into higher-rate tax brackets even if their incomes only keep pace with the cost of living.

Faso also proposed making New York the first state to eliminate its income tax on capital gains and dividends, to encourage new capital investment.

His new proposals followed earlier calls for major reductions in business taxes, including elimination of the corporate income tax on manufacturing and reduction of the corporate tax on all businesses from 7.5 to 6.5 percent; elimination of the state’s estate tax; and expansion of the STAR property-tax reduction program for homeowners.

“Tax cuts create jobs,” Faso told Business Council members. “Those who say that ‘government can’t afford it’ are really saying ‘taxpayers should pay even more to live in New York.’”

Spitzer called for reforming workers’ compensation rules for permanent-partial disabilities, which make up some 12 percent of cases but account for nearly 75 percent of costs. Establishing time limits on such benefits has been the primary target of the Business Council’s workers’ compensation reform efforts.

“All ideas, including caps on benefits for all but the most serious injuries, must be on the table as we bring our program into line with other states,” Spitzer said. “These changes must be accompanied by aggressive rehabilitation and retraining programs, so that workers can get back in the work force.”

His workers’ compensation plan also calls for attacking fraud; improving and reducing the cost of medical care provided through the system; and reforming the Second Injury Fund, which accounts for some 15 percent of premiums.

Without providing specific targets, the attorney general said the goal of workers’ comp reform must be “to reduce the burden of high premiums while increasing benefits for most workers.”

“As governor, I will immediately go to work to build the coalition we need to get this problem solved so that we can once and for all fix this enormous drag on the competitiveness of New York’s businesses,” he said.

Spitzer repeated earlier calls for reducing energy costs by making it easier to site new power plants and supporting new technologies such as clean coal. In his remarks to the Business Council, he proposed targeting the state’s low-cost power programs exclusively to “those companies for whom low cost power is a critical component of their ability to compete.”

Spitzer also proposed changes to the Wicks Law, which drives up public construction costs by requiring multiple contractors on projects costing more than $50,000. He called for raising that threshold to $1 million outside New York City, and $2 million in the city. Such a step would exclude some 80 percent of construction projects now covered by Wicks, he said.

Both candidates described the state’s economy, and particularly that of Upstate New York, as badly in need of improvement.

“Upstate New York is losing population and shedding jobs in the vital manufacturing sector at an alarming rate, and growth is stagnant on Long Island,” Faso said. “If we are going to compete in a new global economy, we need to make up for 40 years of bad behavior under both political parties.”

“Revitalizing our state’s economy – especially the Upstate economy – demands a major effort,” Spitzer said. “If I am elected governor, we are going to begin immediately to implement an aggressive strategy to reduce the cost of doing business in New York and make New York the best place to do business in the world.”