By Assemblyman Will Barclay
The Tax Foundation, an independent tax policy research organization, released its 11th annual report last week which indicated that New York’s business tax climate is second to last in the country.
California, New Jersey and Minnesota also received shameful ratings while states like Wyoming, South Dakota, Florida and Nevada ranked among the highest.
The report measures how well structured each state’s code is by analyzing more than 100 tax variables in five different categories: corporate, individual income, sales, property, and unemployment insurance taxes.
According to the Tax Foundation, states are punished for overly complex, burdensome, and economically harmful tax codes, but are rewarded for transparent and neutral tax codes that do not distort business decisions.
Those of us who live and work here know firsthand.
We don’t need a report to tell us that our tax climate is bad for business.
We need to change the climate.
To be sure, some changes instituted in the last two years are not reflected in this study, such as the estate tax reform.
This was meaningful reform that passed in the budget and increased the exclusion threshold.
By 2017, the exclusion threshold will be $5.25 million, well more than the current $1 million exclusion threshold in New York.
By 2019, the exclusion threshold in New York will be in line with the federal level.
This means that those with farms or larger estates can pass the estates onto future generations without the descendant being penalized up to the threshold amount.
We also combined the corporate franchise and banking franchise taxes and, more importantly, reduced the rate from 7.1% to 6.5% but this won’t be effective until 2016.
We provided significant income tax and real property tax relief to New York’s manufacturers, one of the state’s most vital industries.
We provided a net income rate elimination if manufacturers meet certain criteria and manufacturers will be eligible for a tax credit equal to 20% of their Real Property Taxes paid.
These two provisions will provide manufacturers nearly $300 million in tax relief in 2015.
We also phased out 18-a, a utility assessment placed on utilities and handed to consumers, but this too won’t be realized fully until 2018 when it’s expected to save every rate payer in the state.
More still needs to be done.
* We need to make permanent the Middle Class Tax Cut which was first enacted in 2011 that are set to expire. (A.4575)
* Let’s use some of these financial settlements the state is positioned to receive that are projected to be more than $5 billion to lower property taxes.
* Pass Work NY and provide tax credits for businesses that create new jobs and repeal the ton mileage tax for truckers.
* We need to establish incentives for businesses that are starting up by cutting all application fees by 50% for their first year and eliminate business income taxes for the first year so they can feel confident in their investments. (A.4567)
* Let’s make out-of-pocket college expenses for course requirements tax deductible (A.1564) and provide tax credits for New Yorkers paying college tuition and student loans to encourage them to stay in our state (A.4891).
* Establish a division led by a commissioner who has a fixed term, to review and make binding recommendations for the elimination of burdensome regulations (A.5044).
These are just a few of many ideas that we can use to make our state more attractive for everyone.
The recent study gives us a chance to start this dialogue again about how we compare with other states going forward into the new session.
I’m pleased with some of the tax cuts we made during the budget last year but we’ve made little progress on cutting property taxes.
We’ve provided band-aid relief with the property tax cap but nothing meaningful.
Out of the rankings in the study, we scored 46 for our high property taxes and 40 for our convoluted codes and high sales tax.
Those rankings will not change unless we provide mandate relief to localities to lower our taxes.
If you have any questions or comments on this or any other state issue, or if you would like to be added to my mailing list or receive my newsletter, please contact my office.
My office can be reached by mail at 200 N. Second St., Fulton, NY 13069, by e-mail at [email protected] or by calling (315) 598-5185.