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ASSEMBLY UNVEILS TAX CUT PROPOSAL
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Assembly Speaker Sheldon Silver today unveiled a $750 million tax cut package aimed at helping New York State's working families and promoting job creation.
"The tax cut proposal we advance today balances the Assembly Majority's desire to come to the aid of working families and the need to continue our efforts to spur job creation and economic growth," said Silver. The Speaker announced the tax cut package at a capital news conference and said the targeted proposals would be included in the Assembly budget resolution scheduled to be considered Wednesday, March 15.
Highlights of the plan include eliminating the marriage penalty, increasing the standard head-of-household deduction, suspending the state sales tax on gasoline for the summer, establishing job-creating Empire Zones, expanding Power for Jobs, enhancing the sales tax exemption for telecommunications and cable-related equipment and eliminating the gross receipts tax on manufacturing.
Reducing the Tax Burden on Working Families
"At this time of historic economic prosperity we have the opportunity to provide direct and real assistance to the men and women who sacrifice for their families, work hard to pay the bills and contribute to the economic health of their communities," said Silver.
Specific components of this portion of the tax cut plan include:
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Eliminating the marriage penalty under the Personal Income Tax by increasing the standard deduction from $13,000 to $15,000 for married couples filing jointly ($180 million);
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Increasing the standard deduction from $10,500 to $13,000 for head-of-household taxpayers to coincide with the increase of the standard deduction for married taxpayers ($90 million);
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Increasing the Earned Income Tax Credit from 25 percent to 30 percent of the federal credit ($19.8 million from state funds);
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Providing a refundable tax credit of up to $500 for full-time college students ($134 million);
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Helping middle class parents pay for child care by enhancing the Child and Dependent Care Credit ($39 million);
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Suspending the sales tax on gasoline this year from July 1 through Labor Day ($63 million);
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Providing homeowners a $500 income tax credit for replacing residential fuel oil storage tanks ($5 million); and
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Providing various tax incentives to encourage residency of police officers within certain municipalities ($12.5 million).
Target Tax Cuts for Job Creation
The cornerstone of the Assembly's job-creation tax cut package is the establishment of Empire Zones throughout the state to transform current Economic Development Zones (EDZs) into virtual "tax-free" zones. When fully implemented, Empire Zones will save businesses in these areas more than $64 million.
"The creation of Empire Zones will allow us to target incentives and benefits to communities throughout this state that have missed out on the current unprecedented national economic boom," said Silver. "The Assembly has long advocated for regional economic development and the promotion of private-sector investment strategies. The Empire Zones will further these important efforts."
Businesses expanding or locating into an Empire Zone would receive several important benefits including:
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A sales tax exemption on the purchase of all tangible personal property or services used or consumed by a business located in an Empire Zone;
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A state funded 25 percent reduction in the cost of electricity for qualified businesses located in an Empire Zone; and
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A refundable credit against state corporate and income taxes equal to five percent of the cost of new construction, rehabilitation and technological improvements completed in an Empire Zone.
The Assembly initiative would also make available $150 million in tax credits to insurance companies that contribute to venture capital pools that invest in businesses statewide. One-third of the credits must be allocated to Empire Zones, under the Assembly proposal.
In addition to the Empire Zone initiative, the Assembly tax cut package includes:
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Targeted tax relief for the remediation of brownfields to promote economic development ($23 million);
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A revised method by which financial service companies allocate receipts from where the service is performed to the location of the customer ($17 million). This allocation would also apply to mutual funds owned by banks; and
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Enhancement and modernizing of the sales tax exemption for equipment purchased by telephone and cable companies by expanding the exemptions provided during the last several years. This proposal recognizes that the introduction of new technology requires changes to the definition of tax-exempt equipment ($22 million).
The Assembly is also advancing a $128 million energy tax cut plan
to reduce the cost of energy to residential and commercial users
and spur electric utility competition in New York.
The plan includes:
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A 40 percent universal rate reduction on the first 200 kilowatt-hours of electricity consumed per month by all classes of electricity consumers;
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An enhanced shopping credit for four-tenths of one cent to commercial customers to encourage these consumers to buy electricity from non-utility energy marketers;
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A reduction in the state portion of the sales tax on energy consumed by commercial users from four percent to two percent; and
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An expansion of the Power for Jobs program to allocate an additional 200 megawatts of low-cost power to business that create and retain jobs. At the same time, the Assembly seeks to extend contracts for energy allocations under the Power for Jobs program prior to December 1, 1998 for an additional three years.
In addition, at a cost of $30 million to the state, the Assembly seeks to eliminate the gross receipts tax on manufacturing by providing a credit to reimburse industrial and other manufacturers for the amount of the gross receipts tax paid on utilities used in the state.
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