ALBANYNew York State's "balance of payments" deficit with the federal government is now $39.6 billion, and President Bush's tax plan would reduce that imbalance while boosting the state's important securities sector, Business Council President/CEO Daniel B. Walsh wrote in a letter to the New York Congressional delegation.
"The President's tax cuts would do so much good for our state, I truly don't understand how New Yorkers could do anything but warmly embrace the plan," Walsh wrote.
Walsh enclosed an updated analysis of New York State's balance of payments with the federal government. The Public Policy Institute, the research affiliate of The Business Council, concluded that the state sent Washington $39.6 billion more in tax revenues than it received in federal spending in fiscal 2001, the latest data available. The state's loss was down from $47.3 billion in 2000, according to the Institute.
In 2001, New Yorkers paid the Internal Revenue Service more than $166 billion in personal income, corporate and other taxes. That amount was almost the same as the 2000 figure, the first time in years that state residents' federal tax burden did not increase noticeably. At the same time, Washington sent more dollars to the state, largely in higher Social Security, Medicare and education spending, according to the Institute.
"The tax cuts that President Bush and Congress enacted in 2001 helped stop the upward spiral of the taxes New York sends to Washington," Walsh said. "With our federal tax burden held stable and normal growth in federal spending, New York is already getting a better deal from Washington. It's time to take the next step."
A key element of the President's tax and economic growth package, eliminating the personal income tax on stock dividends, would provide a major boost to the securities industry by giving investors significantly increased incentives to invest in stocks, Walsh wrote.
"I know you are aware that a healthy and growing securities industry is enormously important to the budgets of both New York City and New York State," he told members of the Senate and House of Representatives. "By strengthening this vital industry, the President's plan will generate billions of dollars in new state and city tax revenue.
"When Wall Street was booming in the late 1990s, times were good for New York," Walsh wrote. "When the securities industry is down, as it has been more recently, communities all across the state feel the pain."
The President's proposal to speed up implementation of the tax cuts enacted in 2001, but phased in over several years, would also benefit New York disproportionately, Walsh said.
"Perhaps the most obvious reason to support the President's plan: In sending taxpayer dollars to Washington, and receiving federal spending in return, New York is a perennial loser," he wrote.
Walsh's letter to the New York Congressional delegation, and figures on each state's balance of payments with Washington.