New York Governor Andrew Cuomo, who faces re-election in November, is backing a proposal to provide $2.2 billion in tax cuts, including a reduction in the corporate rate to the lowest since 1968.
About half of the cost would come from freezing property- tax increases at no more than 2 percent for two years, and $400 million would provide a credit for New York City renters, Cuomo said today at a press briefing in Albany. The cuts, which also include changes to the estate tax, will be phased in by fiscal 2017, tapping a projected $2.2 billion surplus, he said.
“It’s proof that it’s a new day,” Cuomo said of the proposal, which will be included in his Jan. 8 State of the State address. “Once we get the negatives out of the way, the high taxes out of the way, then the assets of New York will shine.”
The recommendations were made last month by a commission appointed by Cuomo and headed by former Republican Governor George Pataki and former Democratic state Comptroller Carl McCall. Cuomo added the renter’s credit to benefit New York City residents amid complaints that the proposal disproportionately benefited upstate homeowners.
Cuomo, a 56-year-old Democrat in his first term, says he’s seeking to make New York’s tax structure more business-friendly. In 2011, he pushed through the legislature a measure that raised taxes on the wealthy and cut them for the middle class.
De Blasio Plan
As Cuomo seeks to cut taxes, New York Mayor Bill de Blasio, a Democrat, wants to raise them on the city’s wealthiest residents to pay for universal early-childhood education. The measure needs approval from the state legislature and Cuomo, who says he supports the idea, though not necessarily the funding mechanism de Blasio wants.
Three of the four U.S. counties with the highest median taxes are in New York: Westchester, Nassau and Rockland, Cuomo said today. Since taking office in 2011, the governor has pushed through a 2 percent property-tax cap and a pension overhaul that he says will save localities $69 billion over 30 years.
New York is home to 10,500 local governments, or one for every 395 households, Cuomo said.
“The number of local governments is the next big problem for us to tackle” to lower property taxes, Cuomo said.
The property-tax freeze is designed in part to do that, he said. In the first year, homeowners who live in a jurisdiction that sticks to the 2 percent cap will get a state rebate on any increase in their local bill below the cap. In the second year, governments will have to stick to the cap and have plans to either merge with neighboring municipalities or consolidate administrative services, such as human resources, for homeowners to qualify.
“If the locality wants the credit from the state, then it’ll have to perform,” Cuomo said.
As the two-year plan ends, households earning up to $200,000 annually may continue to qualify for a credit if their local government stays under the cap, he said.
The property tax cap and freeze won’t apply to New York City, so Cuomo also wants to offer a credit to renters who make less than $100,000 a year.
The estate tax exemption would rise to $5.25 million from $1 million and the rate would drop to 10 percent from 16 percent over four years, said Robert Megna, Cuomo’s budget director. The corporate income tax statewide would decline to 6.5 percent from 7.1 percent. For manufacturers in upstate New York, it would fall to zero, building on a plan Cuomo pushed through last year that set up income-tax-free zones around state university campuses.
Reviving the upstate economy, particularly with technology jobs, has been a focus of Cuomo’s. In the 2010 election, he lost the eight-county area surrounding Buffalo in western New York to his Republican opponent, Carl Paladino.
“The loss of manufacturing jobs is a large part of why the upstate economy has struggled,” Heather Briccetti, president of the New York Business Council, which represents thousands of companies, said at the briefing.
“If we could pass it today and get it signed into law, that would be perfect,” she said of the proposal.
© Copyright 2016 Bloomberg News. All rights reserved.