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COLUMN:
“Tax Facts”
Darlene Kerr | Mon, May 7th, 2007

Last month’s visit to the Chamber by Congressman Jim Walsh on Tax Day served as a good opportunity for all of us to focus on the important issue of excessive taxation, at all levels…federal, state and local.
As you are probably all too aware, New York businesses are among the most highly taxed in the country.  In fact, the results of a recent study by the Council on State Taxation, a nonprofit association based in Washington, released by the Business Council of New York State, revealed that businesses in New York paid an estimated $50.5 billion in combined state and local taxes, or 43 percent of all taxes paid in the state in fiscal year 2006.
That tax burden represented 5.9 percent of overall economic activity, or gross state product -- a share that was significantly higher than the cost of business taxes in most large, industrialized states and more than 15 percent above the national average.
According to the study, businesses in New York paid $20 billion in property taxes, $11.3 billion in sales taxes and $7.1 billion in corporate-income taxes in 2006. Another $12 billion came from taxes on personal income earned by owners of S corporations, partnerships and other "pass-through" entities; excise and gross-receipts taxes, unemployment insurance and other taxes.  Total state and local business-tax collections in New York rose by $29 billion, or 33 percent, from 2002 to 2006, the study found.
New York's overall effective business-tax rate of 5.9 percent compares to effective tax rates of 4.8 percent in New Jersey, 4.7 percent in Michigan and Ohio, 4.4 percent in Massachusetts, and 3.9 percent in Connecticut and North Carolina.

These “tax facts” make it very difficult for existing businesses to grow and expand and often leave little or no capital to reinvest in modernization.  This tax environment also makes it difficult to attract new businesses and create jobs. All of which results in a significant competitive disadvantage…nationally and globally. 
   
On the federal level, Congressman Walsh and others are working in the House of Representatives to make the 2001 federal tax cuts permanent. However, the proposed FY2008 federal budget resolutions by the majorities in the House and the Senate assume that the tax cuts will expire completely in 2010 and 2011.
 
Not making the tax cuts permanent has the potential to substantially raise taxes on individuals and businesses. Among the hardest hit would be 26 million small business owners, including 1.65 million in New York State, who would see their tax bill go up. One of the specific proposals supported by Congressman Walsh, Alternative Minimum Tax relief, consists of indexing that tax to the rate of inflation.  Estimates are that this relief would benefit some 50,000 families and businesses in CNY.  That would potentially include many of the hundreds of Chamber member businesses which are sole proprietors or family-owned, paying their business taxes using the personal taxation schedules.
We will continue to work at all levels to encourage a more sensible and, we believe, more progressive tax structure for businesses and families. We are committed to highlighting excessive taxation, and its counter-productive consequences in our discussions with our elected representatives.  You can be assured that this topic will be near the top of our list when we meet with the CNY delegation during New York Day in Washington early this month. I encourage you to let your elected representatives know how important tax relief is to your business, your employees and your family.   

Thank you for all you do!




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