The New York chapter of the National Federation of Independent Business outlined a 10-point plan to reduce taxes at a hearing Wednesday in Albany.
Mike Durant, director of NFIB New York, testified at the hearing co-chaired by state Sen. John DeFrancisco, R-Syracuse. Durant recommended tax reforms, including personal income tax cuts for businesses and extending tax relief to manufacturers that formed as subchapter S corporations.
During his testimony Wednesday, Durant urged legislators to take action and provide more tax relief.
"In his inauguration speech Governor Cuomo said that New York has no future as the tax capital of the United States. He was right about that," Durant said in a statement prior to his appearance. "Since then we've made only modest progress, and I would respectfully recommend to the Legislature and the governor that we need to do much more."
Here is a handful of ideas suggested by Durant to reform the state's tax system:
Regional/Local factors for calculating sales tax assessments – The current system applies external indices which fail to capture the significant variation in the local cost of goods and services. The result is inflated tax assessments on small businesses.
Tiered System for ENI – The Entire Net Income tax rate is currently 7.1 percent for most businesses. The NFIB plan would create several tiers based on income reducing the rate for the smallest businesses. The goal is to allow the smallest and typically youngest businesses keep more of their money to be invested in growth and new employees.
Personal Income Tax Cut – A large majority of small businesses in New York are organized as pass-through companies, which means that they pay their taxes as individual filers. New York’s income tax rate remains among the highest in the country. The NFIB plan would cut personal income taxes by 10 percent for companies earning less than $300,000 and a 5-percent cut for companies earning between $300,000 and $450,000.
Tax Cut for Manufacturers – A 2013 reform provided tax relief in the Corporate Franchise Tax for certain qualified manufacturers. The NFIB plan would extend relief to manufacturers organized as Subchapter S Corps, typically small companies.
The Business Council of New York State joined NFIB New York in calling for broad-based tax reform. The group supports reducing marginal tax rates and eliminating the 1.5 percent alternative minimum tax, among other changes.
The Business Council also backs ending the 18-a utility surcharge and reducing the state's corporate franchise tax.
"While many factors impact a state's economic performance, taxes are a defining factor," Business Council vice president of government affairs Ken Pokalsky said in a statement. "Tax burdens, together with other business costs, have contributed to slow economic growth in New York, especially upstate."
The series of hearings on tax reform will continue Thursday in Syracuse. The hearing will be held at 10:30 a.m. at Syracuse City Hall.
DeFrancisco, who chairs the Senate Finance Committee, will co-chair the hearing along with state Sen. Carl Marcellino, chairman of the Senate Investigations and Government Operations Committee.