S.3671 / A.6845 (Budget)



S.3671 / A.6845 (Budget)


Single Sales Factor Apportionment



The Business Council strongly supports “single sales factor apportionment” for Article 9-A taxpayers, included as Section A of S.3671/A.6845. We urge legislative and gubernatorial approval for this key reform measure.

This broad tax reform legislation will make New York State more attractive for both the retention of existing facilities and jobs, and the location of new capital investments and jobs. It does so by eliminating what is in effect a tax penalty for having a significant in-state physical presence. Enactment of single sales factor apportionment would be a welcome sign that New York wants businesses to succeed and create jobs here.

This reform will benefit key sectors of the state's economy, including the financial service and media sectors that are vital to the downstate economy, and the manufacturing sector which continues to anchor most upstate regional economies. This legislation will also benefit the many small businesses located in New York State whose markets extend beyond our state borders.

Importantly, this reform also makes New York's business tax structure more competitive when compared to that of most other states. Only ten other states have acted to implement single sales factor apportionment in support of their in-state businesses.

Under single sales factor apportionment, corporate franchise taxpayers would base their New York State tax liability solely on their share of sales made to in-state entities. Under current law, this allocation formula considers the percentage of in-state capital and employment, as well as sales.

In short, businesses with significant employment and investments in New York, and whose in-state share of capital and jobs exceed their in-state share of sales, will have reduced tax liability. Likewise, a business that increases their investment or employment in the state will no longer be hit with increased state tax liability because of those in-state investments.

The cost of doing business in New York, including taxes, is far higher than in most competing locations and will remain so even with the enactment of this bill. Analysis done by The Public Policy Institute estimates that businesses, overall, already pay about one-third of all state and local taxes in New York. In 2003, businesses paid an estimated $30 billion in state and local taxes, including corporate taxes, personal income taxes on Subchapter S corporations and other businesses, state and local sales taxes, property taxes and others.

But single sales factor apportionment will significantly improve New York's tax treatment of businesses that create and keep jobs here.

For these reasons, The Business Council supports adoption of single sales factor apportionment, and urges legislative and gubernatorial approval of this measure.

This legislation will be included as one of the scoring measurements of The Business Council's “Vote for Jobs Index 2005.” This is The Business Council's annual assessment of legislator's action on key issues of concern to the state's business community.