Governor Pataki announced his proposed budget will include more than $350 million in new business tax cuts, including several of The Business Council's top priorities for tax reform in the coming year.
"Our policies of cutting taxes, reforming workers' compensation and eliminating unnecessary regulations have directly led to the creation of more than 419,000 new, private-sector jobs," the Governor said. "These new tax cuts will build on this tremendous record of growth and opportunity."
Major elements of his new proposals would:
- Reduce the rates of the bank and insurance taxes, from 9 to 7.5 percent. The bank tax reduction would start in 2000, and the insurance tax reform in 2001, with both fully effective in 2003. The changes would keep the bank and insurance tax rates at the same level as the general corporate tax rate, which will drop from 9 to 7.5 percent by 2002.
- Cut the alternative minimum tax another half-percentage point, to 2.5 percent. Under legislation enacted in 1998, the AMT has already fallen from 3.5 to 3.25 percent, and will drop to 3.0 percent later this year. The new reduction would be fully effective in July 1, 2000. The result will be to allow manufacturers, securities brokers and certain other businesses to make greater use of the state's investment tax credit - that is, to enhance the state's incentives for employers to make capital investments and create jobs in New York.
- Restructure and reduce taxes on energy utilities. The proposal would move all energy utilities from the Article 9 gross receipts tax structure to Article 9-A tax on income, the same as most corporations. The gas importation tax would be repealed, and replaced with a new use tax on natural gas purchased out-of-state that would eliminate the existing incentive for purchasing gas outside New York. Over 10 years, energy corporations would start to pay property taxes on the same basis as other commercial enterprises. Finally, the proposal would create a one-year tax credit to offset the newly reimposed, state-level sales tax on transportation of electricity.
- Accelerate the scheduled elimination of taxes on hospitals and nursing homes. Institutions would realize $223 million in savings, now planned for the year 2000, in the coming fiscal year. Much of the savings would pass through to employers.
- Expand tax credits created last year for emerging technology companies. An employment tax credit would rise from $1,000 to $1,500 per job. A credit for capital investment in such companies would also increase.
- Create a new "capital asset exclusion." This tax incentive would favorably treat any gains from the sale of assets put to productive use in New York. For assets held 10 years, 20 percent of gains would be excluded from tax.
The Governor's plan would also affect farm property taxes; minimum taxes on petroleum businesses, aviation fuel and small agricultural cooperatives; and the real estate transfer tax.
Senate Majority Leader Joseph L. Bruno, who has proposed a major package of new tax cuts, praised the Governor's announcement and noted similarities with the Senate plan.
Like the Governor's proposals, the Senate agenda includes reducing bank and insurance taxes, and reducing the gross receipts tax on utility customers.
Assembly Speaker Sheldon Silver has said his conference will also propose business tax cuts aimed at stimulating job growth.
Governor Pataki has also proposed reducing personal income taxes for lower- and middle-income workers, as well as thousands of small businesses. He noted that businesses and other taxpayers will also benefit from tax cuts, worth hundreds of millions of dollars, enacted in recent years and taking effect in the coming year.
Those include reduction in the corporate franchise tax; the reduction in the AMT; further reduction in the gross receipts tax on utility bills; and elimination of New York's added estate tax.
The Governor was also expected to announce today an additional tax proposal that would create incentives for business investment in cities.