The Business Council Urges State Lawmakers to Avoid End of Session Bills That Impose Additional Mandates & Taxes on Recovering Businesses
ALBANY – As employers across New York State are struggling every day in the fight to recover from one of the worst economic interruptions in the state's history, The Business Council of New York State Inc., on Wednesday, called on the New York State legislature to avoid passing any end of session bills that will impose new taxes and mandates on New York's businesses.
"It’s unclear whether the late Senator Dirksen ever really said, "a billion here, a billion there, and pretty soon you're talking real money," but it's a great quote and certainly applicable as we move into the final month of the 2021 session", said Ken Pokalsky, Vice President, The Business Council of New York State Inc.
Despite New York State receiving $12.8 billion in discretionary federal assistance from the American Rescue Plan Act (ARPA) – not counting billions more that flowed to school districts, municipalities, and other government entities -- the state legislature still raised more than $1 billion in direct business taxes and $4 billion in total taxes. New York stands out like a sore thumb among the states, with no other state adopting significant tax increases so far this year. In sharp contrast, nearly half the states are pursuing legal means to preserve their right to cut taxes despite receiving ARPA funds.
Proposed Taxes of Businesses
New York businesses are also facing a $10 billion tax increase, as state unemployment insurance payments – due to government-directed shutdowns – have depleted our UI benefits account. Under current law, the state's $10 billion in federal advances to pay regular UI benefits will be repaid exclusively by increased state and federal payroll taxes on employers – something already impacting hard-hit small employers in 2021. Interestingly, a handful of states are using some of their ARPA funds to help relieve their state-level UI tax burdens on businesses. Not New York.
And, incredibly, some legislators are advocating for even significantly more taxes, assessments, and spending before their scheduled June 10th adjournment. Major proposals include:
- "Expanded Producer Responsibility" – This bill would impose $800 million or more in direct assessments on businesses that produce or use paper products and packaging, and a York University economist estimates the overall cost to the state's economy as high as $4 billion or more. While promoted to shift costs away from municipalities, the same research shows that similar fees in Canada have not resulted in lower local taxes. The bill is intended to boost recycling and reuse of post-secondary materials. Still, the state could improve its existing curbside recovery and material recycling system by making targeted investments at much lower costs.
- "Climate and Community Investment Act" – Advocates are calling for $15 billion in annual spending, financed by significant new taxes on carbon-based fuels and increased regulatory fees on larger manufacturing, utility, and institutional facilities. This bill ignores the ongoing comprehensive planning process outlined in the "Climate Leadership and Community Protection Act," adopted in 2019, and would create massive new spending programs without considering the state's overall alternative energy and carbon reduction targets. And even though the bill would "rebate" some of these taxes for lower-income households and small businesses, the low annual caps are not nearly enough to offset the bill's increased direct and indirect costs for most eligible employers.
- "New York Health Plan" – Far and away the most expensive bill ever considered by the state legislature, even at the "low" end of cost estimates, this single-payer, government-run health care proposal would cost $120 billion annually, with the high-end estimates as much as $250 billion. The bill proposes 80% of the cost to be borne by payroll taxes on employers, the rest through assessments on employees, resulting in up to 30% increase in payroll costs. Without any effective cost control mechanism, the bill's estimated cost will undoubtedly increase.
These are just the tax and fee proposals. The legislature is advancing other bills that would add millions, if not billions, to the cost of doing business in New York State, impacting workers' compensation premiums, labor costs, litigation expenses, and many others.
New York is on the road to recovery, but some regions - especially downstate - and some sectors are still struggling, with the state's unemployment rate in March at 8.5%, more than 40% above the national average. The path to New York's full recovery is full of risks beyond the state's control, including pending federal tax hikes, rising inflation, growing global unrest, and others – any of which could impair investor and consumer confidence and flatten economic growth. It is essential that the state legislature avoids any additional self-imposed barriers to growth.