Governor Cuomo/via Flickr
December 12, 2013
Divisions are forming in the upcoming debate over tax cuts that’s likely to dominate the new legislative session.
Business groups are largely supportive of the findings of a tax commission appointed by Governor Cuomo. The Commission recommends cuts to the corporate tax, faster phase out of an energy tax, and easing of the estate tax. They also propose a reduction in property taxes by encouraging local governments and schools to cut spending and consolidate.
Business Council President Heather Briccetti was a member of the tax commission. She says the plan could help bring higher paying manufacturing jobs back to New York.
“Manufacturing is starting to come back to the US,” Briccetti said. “We would like New York to be competitive.”
But unions are more skeptical. Steve Madarasz, with the Civil Service Employees Association, the largest state worker union, calls the plan “election year rhetoric."
“It’s very easy to promise more tax give aways to the rich and powerful when you don’t have to pay for them.” said Madarasz. “These are proposals that will come at the expense of local government tax payers, and the community services that they depend on.”
The property tax plan could result in a two year freeze on tax rates. It would give local governments and schools incentives to hold the line on taxes. The state would subsidize additional spending by the schools and local governments, as long as the increase is no bigger than 2% per year. If the localities agree to those limits, then taxpayers in the district could get a rebate on their income tax forms.
Briccetti says it’s often too easy for local town, village or library boards to approve tax increases than to make harder choices to save money. She says pressure from local taxpayers to hold the line on spending might make a difference.
“You need something driving it,” Briccetti said.
She says in the end, it will be up to the local voters to decide which is more important to them: continue existing services or getting tax cuts.
“You have to pick, you have to decide how you want to allocate limited resources,” Briccetti said.
Madarasz says voters don’t want consolidation. He says nearly every time there’s been a vote to merge a town, village or even school districts, it’s failed.
“They’ve rejected it largely because they don’t want to lose control of their local services that they actually care about,” Madarasz said.
Before any of the tax commission’s recommendations can be implemented, they’ll need the approval of the state legislature. Republicans who lead the State Senate in a collation government have been largely supportive of the tax commission’s recommendations. The commission was co chaired by former GOP Governor George Pataki.
But Democrats who are in the majority in the Assembly are reacting cautiously. Assembly Speaker Sheldon Silver says he’s encouraged by one of the proposals, to enact a circuit breaker mechanism that limits the amount of property taxes paid by lower income New Yorkers. But he says he does not want to sacrifice spending on schools, pre-K and money for children of immigrants to attend college, known as the DREAM Act, in order to pay for tax cuts.
“We have to look at the whole thing on balance,” said Silver. “And remember that we still have to support schools in this state and a lot of other things that are necessary.”
The business and property tax cuts would cost $2 billion.
Silver says he was concerned that the property tax cut plan did not apply to New York City residents, but he says Governor Cuomo has promised to fix that, by adding a tax credit for renters into the plan.