For the second time in recent months, governors from other states have visited New York to promote the advantages of working and living elsewhere. Earlier this year, Texas Governor Rick Perry announced that the Lone Star State is Wide Open for Business on his barnstorming tour. And he had the proof to back it up — Texas has no personal income tax, corporate income tax or state property tax, and it was the top state for job growth in 2012. Today, Florida Governor Rock Scott opened the New York Stock Exchange and is here promoting his It’s Your Money $500 million tax cut agenda for the Sunshine State, whose residents already pay no personal income tax or state property tax.
To his credit, Governor Cuomo has stated himself that New York has no future as the tax capital of the world. But in the same speech given nearly three years ago, the Governor also recognized the need for “deeds, not words, and results, not rhetoric.” With yet another last place business ranking from the Tax Foundation, indeed “there are no more baby steps,” and the newly-appointed special task force charged with cutting nearly $3 billion in business taxes has a mighty job.
There’s no shortage of ideas about ways to cut taxes and remove impediments to economic growth, but the task force should be careful to avoid the trap of political simplicity and focus on real solutions to the state’s fragile economic reality. What would a real solution look like? A plan that includes both corporate tax cuts and personal income tax reductions is a start. Any tax relief package that fails to include personal income taxes ignores the way that the majority of small business owners pay their business taxes. Simply put, the more money those business owners pay in taxes, the less money they have to reinvest in their companies and create jobs.
The shrinking manufacturing sector, which lost about 160,000 or one- quarter of its jobs between 2001-2008, also should be at the top of the task force’s priority tax cut list. Although the 2013-2014 budget cut corporate taxes for ‘qualified manufacturers,’ it neglected to include many small manufacturers organized as subchapter S corporations. A similar tax cut for these small businesses would go far in preserving existing manufacturing jobs and creating new opportunities.
Let’s not forget that less than a year ago, the Governor created the New York State Tax Reform and Fairness Commission, which meets in private and had no input on last year’s budget, according to news reports. The new high-profile tax cutting task force however expects to deliver a plan that will be the centerpiece of the Governor’s 2013-2014 budget. Albany has made gestures to appease the small business community, but anything less than a comprehensive plan just isn’t going to cut it this time around.