Gov. Cuomo announces tax direction for the state - NEWS10 ABC: Albany, New York News, Weather, Sports

Gov. Cuomo announces tax direction for the state

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ALBANY, N.Y. - While Governor Andrew Cuomo gets ready for his State of the State address on Wednesday, he announced the direction he wants the state to take when it comes to taxes on Monday.

It's a change of pace for the governor, who usually keeps the State of the State topics secret, but he says this year there are just too many policies to cover during the main speech.

In an effort to give taxes the attention they deserve, he joined with Economic Development Council members from across the state to announce his intentions to cut taxes for all New Yorkers.

He said he is moving forward with the recommendations of the Pataki- McCall commission that called for simplifying the tax code, freezing property taxes for two years, and reducing the corporate income tax for upstate manufacturing companies to zero.

For property owners, they would qualify for a two-year tax freeze, however, there are conditions. In the first year, the jurisdiction it resides in will have to stay within the tax cap. In the second year, that locality will have to agree to share services.

The main goal is to consolidate the 10,500 governments that exist in New York. While that has long been a priority for the governor, he also acknowledged a change when it comes to legalizing medical marijuana.

Cuomo now says he'll use an executive action to allow 20 hospitals across the state to dispense it to those who are seriously ill.  

 

Governor Cuomo's proposal includes the following measures:

2-Year Freeze on Property Taxes

Governor Cuomo's proposal will freeze property taxes for two years, subject to two important conditions. In year one, the State will only provide tax rebates to homeowners who live in a jurisdiction that stays within the 2 percent property tax cap. In year two, the State will only provide tax rebates to homeowners who live in a locality that stays within the cap and also agrees to implement a shared services or administrative consolidation plan. The freeze will not apply to New York City, which does not have a property tax cap. Once fully implemented, this tax relief proposal will provide nearly $1 billion in relief with an average benefit of approximately $350 for nearly 2.8 million homeowners.

Property Tax "Circuit Breaker"

Under the property tax circuit breaker proposal, 1.9 million low- and middle-income taxpayers pay an effective real property tax rate relative to income that exceeds their income tax rate. To help these individuals and families, Governor Cuomo proposes that the State provide tax relief based on a taxpayer's ability to pay. Households earning up to $200,000 would be eligible and the benefit would be administered as a refundable tax credit against the personal income tax with an average benefit of approximately $500. While the credit would be available statewide, in areas outside of New York City, only residents of jurisdictions that adhere to the property tax cap would qualify. This credit would be worth $1 billion in tax relief when fully phased in.

Renters' Tax Credit

Over 829,000 low-income renter households pay more than 50 percent of their monthly cash income on housing costs and thousands of moderate-income renters face similar burdens. To provide tax relief for renters, Governor Cuomo proposes providing tax relief for renters with incomes below $100,000 by offering a refundable personal income tax credit that increases with family size. This proposal would provide over $400 million in tax relief for 2.6 million renters.

Estate Tax Reforms

While the federal government exempts the first $5.25 million of an individual's estate, New York only exempts estates valued below $1 million. To end this unnecessary incentive for elderly New Yorkers to leave the state, Governor Cuomo proposes increasing the New York estate tax threshold to $5.25 million and lowering the top rate to 10 percent over four years. Beginning in 2019, the State estate tax exemption would equal the Federal exemption, which is indexed to inflation. This change would exempt nearly 90 percent of all estates from the tax, restore fairness and eliminate the incentive for older middle-class and wealthy New Yorkers to leave the State.

Cut Business Taxes and Treat Businesses More Fairly

To streamline the tax structure and provide relief for businesses, Governor Cuomo recommends that the State merge the bank tax into the corporate franchise tax and lowering the rate to 6.5 percent – the lowest rate since 1968. These changes will modernize the corporate tax structure to reflect a 21st Century financial services sector, simplify compliance and eliminate disincentives for financial firms to invest and grow jobs in New York. When fully implemented, the proposal will provide $346 million annually in tax relief to New York businesses.

Real Property Tax Credit for Manufacturers

To grow existing manufacturers and attract new manufacturing businesses, Governor Cuomo proposes that the State create a refundable credit against corporate and personal income taxes that would be equal to 20 percent of a firm's annual real property taxes. This credit would provide $136 million in tax relief to the manufacturing sector.

Eliminate Tax Rate on Upstate Manufacturers

To encourage the growth of manufacturing Upstate, Governor Cuomo recommends that the State eliminate the corporate income tax rate for Upstate manufacturers. This proposal would provide an additional $25 million in tax relief for Upstate businesses and complement the proposal to reduce property taxes on manufacturers.

Accelerate phase-out of the 18-A Surcharge

To provide tax relief to both families and companies in energy intensive industries, Governor Cuomo recommends that the State immediately eliminate the two percent Temporary Utility Assessment (18-A) levied on commercial electric, gas, water and steam utility bills for industrial customers and accelerate the phase-out for remaining customers. New Yorkers already pay some of the highest energy bills in the nation yet this surcharge increases the already high burden on struggling families and companies. The phase-out will save businesses and residents $600 million over the next three years.

Tax Simplification

Governor Cuomo is proposing a series of actions to simplify the tax code to eliminate nuisance provisions, many of which make it difficult to do business in New York. These measures include the repeal of: the personal income tax minimum tax add-on; the boxing and wrestling exhibitions tax; the tax on agricultural cooperatives; and the stock transfer tax, which is actually a zero-rate tax, meaning it collects no revenue. In addition, the income threshold for filing of a personal income tax return will be increased from $4,000 to the same level as the taxpayer's standard deduction, eliminating the need for 270,000 taxpayers to file a return. Tax simplification efforts also include modifying signature requirements on e-Filed returns prepared by tax professionals, and aligning mobility and personal income tax filings for the self-employed.

Building on past successes

New York has long had a reputation as a high-tax, anti-business state. Since taking office, Governor Cuomo has taken steps to tackle this issue including: limits on the growth of state spending, the enactment of a property tax cap, the lowest middle class tax rate in 60 years, elimination of the MTA payroll tax on more than 700,000 small business and the self-employed, creation of a new family child tax credit, tax cuts for small businesses and manufacturers, reforms to unemployment insurance and workers compensation insurance, and new START-UP NY tax free zones. The combination of effective budget management and adherence to the 2 percent spending limit benchmark is expected to further improve the State's fiscal position.

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