Cuomo Tax Commission Would Cut $2B In Property, Business Taxes
New York Governor Andrew Cuomo’s Tax Commission is recommending a $2 billion package that includes a temporary freeze on property taxes, and a cut in corporate taxes to a 40 year low.
Cuomo’s Tax Commission is recommending a $1 billion reduction in property taxes, including a temporary halt to local government and school tax increases, as well as a decrease in the corporate tax rate. Upstate manufacturers would pay an even lower corporate tax rate, of just 2.5%. The commission also wants to increase the threshold for the estate tax from the present $1 million dollars to over $5 million.
The governor, while not committing to specific recommendations now, says much of it is possible.
“It’s good news that the state is in the position to contemplate tax cuts,” Cuomo said.
The plan would freeze all present property tax rates, if local governments and schools cooperate, for two years. The municipalities and school districts would then get a 2% increase in cash each year from the state. Some property tax payers would even get a rebate on their taxes, through what’s known as a circuit breaker, if their taxes are determined to be too high for their income level.
Tax Commission co-chair, former Governor George Pataki says taxpayers would finally be getting some relief.
“This is a positive step,” Pataki said.
Pataki, a Republican, had wanted the commission to recommend reducing the state’s income tax, says he’s now satisfied that a temporary tax surcharge on the wealthy will expire as planned in five years.
The other co-chair, former State Comptroller Carl McCall, a Democrat, chided local governments and schools for what he says is a continued high rate of spending that’s contributed to the state’s highest in the nation property taxes.
“All of the various levels of government have to find ways of working together and sharing services,” McCall said. “And finding ways of reducing the burdens that have been placed on our citizens.”
Ron Deutsch, with the progressive leaning New Yorkers for Fiscal Fairness, had been pressing for the circuit breaker as a way to ease the property tax bills of New Yorkers who can least afford to pay. He says it all sounds good, but he’d like to hear more specifics.
“The devil is always in the details,” Deutsch said.
Deutsch is not a supporter of the business tax cuts. He says studies have shown that millions of dollars in state tax credits given to businesses have not improved the economy or created jobs. He recommends eliminating what critics have called “corporate welfare” instead. And he says upping the threshold on the estate tax is a “huge give-away to the very wealthy”.
Business groups disagree. The state’s Business Council says the estate tax changes would help small businesses and farms, and reductions in corporate taxes would benefit industries that have made a significant commitment to New York.
EJ McMahon, with Empire Center, a fiscally conservative think tank, is also pleased with the business tax cut recommendations, which include a swifter phase out of an energy tax surcharge. But he says overall, the tax cuts are not the “game changer” that New York needs. And he says the temporary property tax freeze would actually provide very little real economic benefit.
“It’s aimed at achieving a desired political result,” McMahon said.
2014 is an election year for Cuomo and all members of the legislature.
McMahon says a 2% per year property tax cap enacted two years ago is already working. And he says the real way to get property taxes down is to reduce unfunded mandates and other costly rules and regulations for schools and local governments.
One unanswered question is how to pay for the $2 billion in new tax cuts. The state already faces a projected $1.7 billion structural deficit, so Cuomo and lawmakers would need to potentially come up with $3.7 billion from other parts of the budget, if they want to enact all of the tax commission’s recommendations.