Cuomo Proposes Tax Cut Plan
Governor Cuomo released a key portion of his State of the State address early. He unveiled a plan to cut business taxes, and potentially freeze local property taxes for two years.
Surrounded by business leaders, Governor Cuomo outlined a plan that would cut business taxes, and result in property tax reductions for businesses and homeowners, if local governments and schools comply with a set of requirements in the next three years.
Cuomo wants to reduce the corporate tax rate, and eliminate it altogether for manufacturers who want to expand or locate upstate, where the economy continues to lag.
“You can’t beat zero,” Cuomo said.
Cuomo, a Democrat, recommends adopting most of the recommendations of a tax commission that he appointed and was co- led by one of his predecessors, former Republican Governor George Pataki.
The plan for property tax reductions could freeze tax rates for two years. But it is dependent on local governments, schools, and other taxing entities, like water boards and library boards, holding the line on spending. In exchange, the state would give them some additional money. The local governments and schools would also, in the second year of the program, have to demonstrate that they are consolidating and sharing some services with other governments. If they fail to do that, the state would withdraw the additional aid, and property taxes would go up after all. Then, Cuomo says, the local government leaders and school officials would have to be the ones to explain to the tax payers why the tax freeze was rescinded.
“You’ll have to explain to them why they didn’t,” Cuomo said.
In the third year of the property tax reduction plan, lower income earners and homeowners who pay a high percentage of their income on property taxes, could see a tax rebate in what’s known as a circuit breaker.
The plan also includes a tax credit for renters in New York City. And it significantly lowers estate taxes, by raising the threshold of taxable estates from $1 million dollars to just over $5 million dollars, and lowering the tax rate to 10%.
The plan was praised by the business leaders who attended the power point presentation, including the Business Council President, Heather Briccetti.
“I really think if we could just pass it today, and get it signed into law, that would be terrific, ” Briccetti said.
Not everyone is on board, though. Ron Deutsch, with New Yorkers for Fiscal Fairness, a progressive leaning group, says the plan does not go far enough to address New York’s income inequality, and gives too generous a tax break to wealthy families passing on their estates to their heirs. Deutsch’s group advocated for a circuit breaker for property taxes, but he says Cuomo’s plan is too complicated, and too reliant on the machinations of local governments.
“What the governor needs to do is scrap the idea of these estate tax reductions and giving money to the wealthiest families, ” said Deutsch, who say the tax breaks should instead go to those who “desperately need it”.
While some of the tax breaks could take effect in the upcoming year, as long as the legislature agrees to the plan, the full $2.2 billion dollar a year program, including the circuit breaker, would not take effect for three years.
New York City Mayor Bill de Blasio wants an additional tax on New York’s richest, to pay for universal pre-Kindergarten. Cuomo says while he agrees with the goal of universal pre-K, he does not include new taxes on high income earners in his plan. But the governor says he realizes that the economy could worsen by the time his tax plan is fully phased in, and he did not rule out extending the state’s temporary income tax surcharge on millionaires, which is due to expire in 2017, to help pay for it all.
Reaction from legislative leaders was initially positive. In a statement, Senate Republican leader Dean Skelos said He is “encouraged that the Governor has included a number of long-held priorities of the Senate Republican conference in his recommendations”, but urged Cuomo to go one step further and enact a permanent cap on state spending.
Assembly Speaker Sheldon Silver, a Democrat, called the tax plan a “bold” vision, but says the state budget ultimately needs to “meet the needs of our state's most vulnerable citizens while at the same time providing tax relief for those who need it most”.