To continue recovering from the Sept. 11 terrorist attacks, New York must "give highest priority to those steps that promise the greatest payoff in economic growth," Business Council President Daniel B. Walsh said in a letter to Governor George Pataki.
Walsh praised the Governor for his strong leadership in the wake of the atrocity, and said New Yorkers will meet the challenge of moving forward "because of the vitality of our people and our businesses, and because of the dramatic improvements you and the Legislature have made in our economic climate in recent years."
"We must continue to build on that progress. Doing so will give us the competitive advantage to continue creating the jobs New Yorkers rely upon," Walsh added.
The Governor's 2002-03 Executive Budget should "give highest priority to those steps that promise the greatest payoff in economic growth - which in turn will mean more security for working families and individuals, reduced need for government spending on public assistance, and greater opportunity for the next generation."
In particular, that means ensuring that already enacted tax cuts must go forward on schedule, and making major long-term state investments in research and development collaborations among university, industry, and government labs in high-tech areas with the most intellectual and economic promise for New York.
Tax cuts: Already enacted tax cuts scheduled to take effect near year include further cuts to the states' gross receipts tax on energy and to the sales tax on transmission and distribution of natural gas.
"Each of these reforms will help restrain New York's high energy costs - itself a key step toward a more competitive business climate," Walsh said.
Even before the terrorist attacks, New York was already seeing serious economic setbacks. Especially troubling, Walsh noted, is the loss of more than 40,000 manufacturing jobs in the year ending September 2001.
To help slow and reverse manufacturing losses, Walsh said, the Governor should continue to press for two key tax reforms he first proposed last year: elimination of the alternative minimum tax (AMT) and adoption of the single-sales factor as the basis of corporate taxation.
By adopting the single-sales factor, New York would apportion corporate taxes on just one factor, in-state sales. Corporate taxes currently reflect not only in-state sales, but also in-state payroll and in-state property. This has the effect of reducing a corporation's New York taxes if it puts jobs and plants in other states.
"Eliminating the alternative minimum tax and moving to the single sales factor make even more sense now, when the competition for good manufacturing jobs is tougher than ever. We strongly urge you to renew your push for these much-needed reforms.
High-tech R&D investments: Governor Pataki last year proposed significant state investments in technology through a "Centers of Excellence" program; Senate Majority Leader Joseph Bruno advanced a similar proposal for substantial investments in biotechnology through his "GEN*NY*SIS" initiative. Late last month, the state approved $100 million in economic-development initiatives, including $10 million for the Governor's Centers of Excellence plan, GEN*NY*SIS, and additional economic-development initiatives proposed by the Assembly.
Even greater investments in such initiatives are needed to deliver the full economic-development potential that there is in high-technology areas. "It is clearer today than ever before that investments in areas like biotechnology, nanotechnology and information technology are critical to the state's and nation's future."
Walsh also:
- Urged the Governor to advocate a state tax code that conforms with any changes in the federal tax code to prevent loss of competitive ground to other states. For example, Congress is considering increasing companies' ability to depreciate certain expenses quickly. If Washington does this, and New York fail to follow suit, "our inaction could effectively worsen our competitive position compared to other states."
- Noted that the recent federal tax-cut package reduces, and then eliminates in 2005, the allowable federal credit for state death taxes over several years. This means Albany "must enact conforming estate-tax legislation or return New York to the days when our estate tax gave successful individuals an incentive to move elsewhere."