ALBANY, N.Y. — Business tax reforms and lower business tax burdens, proposed by Governor Cuomo, will produce significant job, income and economic benefits for the state, according to a report issued today by The Public Policy Institute of New York State, Inc. (PPI), the research and education affiliate of The Business Council of New York State, Inc. The report, “Analysis of Economic Impacts of New York Corporate Income Tax Reform,” prepared for PPI by Robert Cline, national director of state and local tax policy economics for Ernst and Young, is based on the corporate franchise tax reform framework set forth by Governor Cuomo's two tax commissions.
The analysis, based on the Regional Economic Models, Inc. (or REMI) model of the New York State economy, found that restructuring the tax code and lowering the basic tax rate would produce more than 14,000 new jobs by 2019, and almost 18,000 new jobs by 2024. It also shows in-state personal income will increase by $1.3 billion by 2019, and $2.1 billion by 2024; and incentivize between $500 and $800 million in new private sector capital investments.
“The Business Council strongly supports the tax reform package laid out by Governor Cuomo,” said Heather C. Briccetti, Esq., president and CEO of The Business Council of New York State, Inc. who also served on the Governor's Tax Relief Commission. “Our report today illustrates the size and scope of those economic impacts that will continue to move New York in the right direction by creating jobs and growing the economy.”
“The study confirms our strong belief that a modern and simplified tax code for all New York businesses will reap benefits for all New Yorkers,” said Michael P. Smith, president and CEO of New York Bankers Association.
“The Governor's proposal for tax reform, including repeal of the onerous 18-a assessment on energy, is a welcome message for manufacturers,” said G. Thomas Tranter, president of Corning Enterprises and a board member of The Business Council of New York State, Inc. “These reforms support Corning Inc.'s continued commitment to invest and grow jobs in New York.”
The new jobs created through tax reform would be across the state's major business and employment sectors, with the largest increases in the construction, trades and business service sectors, with additional jobs in manufacturing, financial services and others.
The report evaluated the economic impact of a business tax reform package that includes: a merger of the corporate franchise and bank taxes, a reduced net income tax rate from 7.1 to 6.5 percent, elimination of the alternative minimum tax, additional rate reductions and a real property tax-based credit for manufacturers, among others. These proposals were set forth in the Tax Reform/Fairness Commission co-chaired by Peter Solomon and Carl McCall, which issued its final report on November 13, 2013, and the Tax Relief Commission, co-chaired by McCall and former Governor George Pataki, whose final report came out in early December. These proposals were intended to simplify the state's business tax code, treat similar taxpayers more uniformly, and promote economic growth.
The strong economic impact of this tax reform package is due to tax reductions being targeted in industries with high economic multipliers, such as manufacturing, information, real estate and financial services. These multipliers measure the number of total new jobs that result from an initial new direct job added in each sector. Business tax reductions in these industries have strong spillover effects that increase employment and economic activity throughout the state's economy.
The report also states that increased economic activity and personal income will generate additional state and local income, sales and other taxes, and that even in the short term, may offset about one-third of the initial projected state revenue loss due to proposed tax reductions.
The full report is available on the Public Policy Institute of New York State, Inc. (PPI) website at ppinys.org or The Business Council of New York State, Inc. website at bcnys.org.
PPI is a non-partisan, tax-exempt 501 (c) 3 organization. It does not accept public funds and depends on the support of corporations, foundations and the public.