ALBANY—Proposed business-tax increases of close to $600 million will discourage economic growth and job creation across the state at a time when New York's employment growth already lags behind, the president of the Business Council of New York State Inc. told key legislators today.
“Raising business taxes will hurt the Upstate economy,” Business Council President/CEO Kenneth Adams said in testimony to the Senate Finance and Assembly Ways and Means committees. “And, as Mayor Bloomberg has said, a major tax increase on employers will hurt New York City as well.
“We're already losing jobs and people because our taxes are too high,” Adams said. “Common sense and painful experience make one thing clear: Raising business taxes by half a billion dollars will only make our economic problems worse.”
Speaking at a legislative hearing on the proposed 2007-08 Executive Budget, Adams praised Governor Spitzer's proposals to reform New York's health-care system and to require heightened accountability from school districts across the state.
The Executive Budget also includes a number of proposals that would increase taxes for “hundreds, if not thousands” of New York employers, Adams said. He pointed to four items of particular concern:
- Combined reporting. Under the proposed budget, the income of companies in other states could be taxed in New York if subsidiary, related or parent corporations are doing business in the state. The Budget Division estimates that proposal will cost taxpayers $215 million annually.
- Changes to taxes on banks and real-estate investment trusts ($181 million). Bank-related changes include an increase in the tax on employee wages, so banks' tax liability would increase when they increase employment.
- Elimination of a deduction for production costs incurred by manufacturers, research, software, film and production companies ($35 million).
- An increase in the tax on health-insurance policies ($75 million).
Private-sector employment nationwide rose by 1.4 percent in 2006, while the increase in New York was 0.8 percent, barely more than half the national increase, Adams said. Upstate's overall job growth was even lower, at 0.3 percent. The state's own economic experts predict that New York will continue to lag significantly behind national employment growth in 2007.
“If we want more jobs, we need to make New York a more competitive location for business,” Adams said. He praised the Senate Majority's proposals to reduce business taxes across the board, saying such an approach will encourage investment and job creation across the state. He also urged lawmakers to encourage broad-band telecommunications development, by providing a temporary exemption from property taxes for optical fiber used in telecommunications.
Adams also asked the Legislature to act quickly on renewal of the Power for Jobs program and related initiatives that provide lower-cost energy for manufacturers and other businesses. The program expires June 30.