Bulletin #19: July 14, 1999
We can't leave banks and insurers out of coming tax cuts
More than 99 percent of incorporated businesses in New York will see their state tax rate decline in the coming year. The business tax reductions enacted last year, thanks primarily to the leadership of Senate Majority Leader Bruno, will cut taxes for some 500,000 employers.
Most prominent among the reforms passed in 1998, our Article 9-A corporate tax rate will drop from 9 to 7.5 percent over three years. That's an important step toward a more competitive tax climate.
Unfortunately, two key industries - banking and insurance companies - were not included in the new business tax cuts. It's absolutely essential that Governor Pataki and the Legislature eliminate that inequity, as part of a broader package of tax cuts in this year's budget.
Thousands of high-paying jobs are at stake
The number of companies affected - and the potential "loss" of revenue - are relatively small. In contrast to the half-million businesses covered by the 1998 business tax reductions, the number of bank and insurance taxpayers is around 1,600. And the "cost" of fair treatment for these key industries is also relatively small. The Budget Division pegs it at $150 million, a fraction of 1 percent of state tax revenue. That's small change, compared to the losses New York could suffer if we don't create a competitive climate for financial services companies.
The economic stakes are huge. Banking and insurance are two of our state's historic strengths. Together, they employ some 250,000 New Yorkers, in jobs that pay better than average salaries. Both industries also tend to be among the first and most generous when it comes to supporting community activities and charitable organizations.
Unfortunately, in recent years we've watched both of these key sectors grow more rapidly in other states than in New York. We can help change that competitive picture by cutting taxes for bank and insurance companies the same way we're cutting them for other employers.
The good news: Both Governor Pataki and the Senate Majority include tax parity for banking and insurance companies in their tax-reduction plans for this year. The bad news: We haven't heard much about those plans in recent weeks.
Instead, Albany seems consumed with talk of more spending. Where are the tax cuts?