WPCNR ALBANY ROUNDS. From the Governor’s Press Office. (EDITED) December 10, 2013:
Today, Governor Andrew M. Cuomo’s Tax Relief Commission recommended (subject to legislature approval), the creation of a program to freeze property taxes for two years.
In year one of the freeze all eligible homeowners in taxing jurisdictions that adopt local budgets that remain within the property tax cap would receive a State credit equal to the growth in their property taxes.
In Year 2, the freeze will continue for those homeowners living in jurisdictions that remain within the property tax cap and take measures to reduce costs, such as sharing services with other jurisdictions or consolidating.
In addition, while programs that cap and freeze real property taxes can keep the burden of real property taxes from increasing, there is a need to provide relief to taxpayers who are already over-burdened by the current level of property taxation. The Commission recommends that the State develop a program that would target real property tax relief based on an individual homeowner’s ability to pay.
Lower\st Tax Rates in 44 years for Businesses to Make New York Competitive
To encourage New York’s economic competitiveness, investment and further growth, the Commission recommends lower rates for businesses and a simplified tax structure.
This includes the reform and simplification of the State’s primary corporate income taxes coupled with a reduction in the corporate income tax rate to 6.5 percent, the lowest corporate rate since 1968.
The rate for upstate manufacturers upstate would be reduced further, to 2.5 percent, the lowest rate ever. In addition, all manufacturers will benefit from a recommendation by the Commission to reduce property taxes on manufacturers by 20 percent through a State credit program.
Move up Utility Assessment Phaseout
To further encourage business expansion, the Commission recommends that the temporary utility assessment (18-a), scheduled to be eliminated in 2018, will be eliminated in 2014 for industrial customers and all other customers will see an accelerated phase out of the surcharge. Together, these proposals will tackle the remaining barriers to investment and job growth that exist in the current tax regime.
Raise Estate Tax Threshold to $5.25 M
The Commission recognizes the need to update the estate tax. New York remains one of only 17 states with either an estate tax or an inheritance tax, and only two states currently have a lower exemption. Because estate tax thresholds have not kept pace with the rise in home values, more and more middle-income New Yorkers find themselves subject to the tax.
The Commission is therefore recommending a major reform of the estate tax, increasing the State’s threshold to $5.25 million, indexed to inflation, and lowering the tax rate.
Finally, the Commission endorses the majority of the Tax Reform and Fairness Commission proposals to simplify the structure of New York’s tax system by eliminating nuisance taxes.
The Commission’s recommendations focus on providing property tax relief for New York homeowners and businesses and enhancing the State’s economic competitiveness. In addition to providing tax relief, the Commission recommends providing incentives to local governments to reduce the cost of operations. Further recommendations include lowering the corporate tax rate to its lowest level in 46 years; reducing the tax rate for manufacturers Upstate to its lowest level ever; and updating the Estate Tax to bring New York in line with other states. This report is enabled by three years of fiscal integrity and responsible budgeting that puts the state in a position to examine new ways to provide tax relief to New Yorkers. The final report can be accessed here: http://www.governor.ny.gov/assets/documents/commission_report.pdf.
“For far too long, property taxes have been a crushing burden on New York homeowners and businesses, hurting job growth and driving individuals and families from the state,” Governor Cuomo said. “While we have made tremendous progress over the last three years in bringing down taxes for all New Yorkers, this Commission has taken the two billion dollar surplus that resulted from our responsible budgeting and fiscal reforms to propose even further reductions for New York taxpayers. I look forward to working together with the Legislature to review these recommendations and continue our efforts to reverse the state’s reputation as a tax capital and make New York a friendlier state for families and businesses.”
The Commission’s recommendations for tax relief build off three years of holding state spending to 2%, ending automatic budget inflators in Medicaid and education spending, pension reform that will save taxpayers tens of billions of dollars, and a downsized state labor force.
Governor Pataki said, “Governor Cuomo asked us to focus on real property taxes and we did, delivering a robust program that will provide real relief to middle class taxpayers and especially those on fixed incomes. The Commission also recommends much needed reforms to estate, business and energy taxes and ensuring the PIT top rate phases out as planned. The Commission worked overtime to deliver our recommendations today and I’m proud of the package we’ve assembled.”
Chairman H. Carl McCall said, “This report shows once again what is possible when partisan differences are put aside for the good of the people. The members of the panel embraced the Governor’s charge and his cooperative approach to come up with bold recommendations made possible by three years of fiscally sound budgeting that has yielded a two billion dollar surplus. The old Albany would have spent this money, but under Governor Cuomo’s leadership, we will be giving it back where it belongs – in the pocket of tax payers.”
The key recommendations put forward by the Commission are based on the finding that the property tax remains the most burdensome tax facing individuals, families, and businesses in New York State, and a critical impediment to economic growth. New Yorkers continue to face some of the highest property tax bills in the nation, whether measured in absolute terms, or as a percentage of home value. The Commission recommends using $1 billion of the $2 billion revenue pool to further reduce the burden of the property tax on homeowners, and provide incentives for cost reduction at the local level.