Plan Includes Major Tax Cuts for Small Businesses and Manufacturers
Senator Joe Robach and his colleagues in the Senate Majority recently unveiled a new economic development plan that will create new jobs, particularly Upstate, revitalize communities and encourage young people to stay in New York State.
Provisions of the plan include new, job creating tax cuts for small businesses and manufacturers that will make them more competitive.
In addition, the Senate plan would provide tax credits tied to the creation of new jobs; would reduce unnecessary, costly and burdensome government regulations, provide tax credits and interest-free loans to students who stay in New York State, reform the Empire Zone program to make it more effective and accountable and encourage new investments in community revitalization.
Highlights of the Senate’s job creation plan include:
> Cut taxes on small businesses in half and eliminate business taxes for small manufacturers;
> Create new tax credits tied to job creation and job training by manufacturers;
> Make reforms to the Empire Zone program to increase accountability to ensure that companies receiving benefits create high-paying jobs;
> Help small businesses obtain loans to grow;
> Reduce health insurance costs for small businesses;
> Expand tax credits for investments by emerging technology businesses;
> Provide low cost student loans and create a tax credit program for students who go to college in New York and stay in New York;
> Eliminate state regulations, red tape and paperwork; and
> Give local governments greater authority to provide tax breaks for community and neighborhood revitalization projects;
CREATING ECONOMIC OPPORTUNITY
Small Business & Manufacturing Tax Cuts
The Senate plan includes broad based, statewide tax reductions and redirected state investments that will lower the cost of doing business, level the playing field for existing businesses and help small businesses and manufacturers grow and create new jobs
In the first year of the Senate plan, the corporate franchise tax would be cut in half for businesses with 20 employees or less or not more than $1 million in net income. In the following year, the business tax would be completely eliminated for small manufacturers. This would reduce corporate taxes for all small businesses by $25 million the first year and cut taxes by an additional $15 million for all small manufacturers in the following year.
This tax cut would particularly benefit main street businesses, existing small manufacturers, small start-ups and high technology companies. New York State has 18,500 technology companies with an average of 16 employees. There are a total of more than 427,000 small businesses in New York that employ more than 3.9 million people.
"The Senate Republican Majority's economic development plan is bold and innovative. Encouraging manufacturers and small businesses to create and retain jobs in this state is just what our economy needs and it is what this plan would do," said Kenneth Adams, president & CEO of The Business Council of New York. "This plan would provide tax relief and incentives to all manufacturers and small businesses seeking to provide jobs in New York rather than to a few in targeted zones."
"Small businesses in New York State--the backbone of our state's economy--struggle to survive as they contend with among the highest taxes, health care and energy costs in the nation. The Senate Majority is to be commended for unveiling this new job creation plan to address these critical issues and strengthen the small business sector. This package takes on many of the core issues challenging New York's entrepreneurs and job creators, and is a breakthrough proposal focused on lowering New York's second highest in the nation cost of doing business. NFIB looks forward to working with the Senate Majority--long-time allies of small business--and all our supporters in the legislature to enact this proposal."
IMAJIN Manufacturing Tax Credit
The Integrated Manufacturing Jobs and Investment Credit (IMAJIN) initiative would provide a tax credit based upon a manufacturer’s creation of new jobs and the amount of personal income taxes generated from those jobs.
The Senate’s plan would reduce state taxes on manufacturers by $130 million a year by providing manufacturers incentives for creating new jobs and providing job training and for making new investments. If the investments accompany employment and/or training, the credits would be refundable. These benefits would help prevent "outsourcing" and keep jobs in New York.
"This credit provides an incentive for manufacturing businesses to create or relocate jobs in New York State and help discourage outsourcing of jobs," Senator Joe Robach said. "It would also send a message to large-scale manufacturers, such as major automakers, that New York is ready to compete and win to land these kinds of companies and jobs."
The IMAJIN initiative includes:
> A payroll tax credit to manufacturing employers based upon the creation of new jobs. The credit would be equal to 90 percent of the amount of personal income taxes generated from those new jobs;
> A 50 percent employee skills job training credit;
> A 15 percent Manufacturers Investment Tax Credit (MITC) that could be combined with either the new employee credit or the training credit to get a refundable credit; and
> A new MITC credit to be combined with prior year’s carry-over credits to generate a refundable investment tax credit.
The IMAJIN credit will not only help traditional manufacturers, but would also apply to farmers who would be eligible for the IMAJIN credits. Farmers would be offered assistance so they can make investments to ensure the future of our state’s largest industry.
Helping Small Businesses Get Loans
Often companies hesitate before undertaking transformational projects because it is difficult to obtain working capital loans. As with a start-up companies, there is often a lag between when the investment is made and when the revenue begins to flow.
To assist small businesses that have been negatively impacted by the ongoing tightening of the credit market, the state would provide a loan guarantee for small businesses to access working capital loans, with a three-year repayment deferral.
Easing Small Business Health Insurance Costs
The high cost of providing health insurance to employees is a primary concern of small businesses. The Senate plan includes four reforms that would employ a market-based approach to expand access to affordable quality health care by reducing the cost of health insurance policies for small businesses.
> Expand Healthy NY from 208 percent of the Federal Poverty Level (FPL) to 250 percent of the FPL. This would make a family of four with annual net income of approximately $60,000 per year eligible for the program;
> Make Healthy NY available to all, but at an unsubsidized rate. Doing so would reduce health insurance costs for small businesses at no cost to the State because qualified businesses would be able to purchase streamlined health insurance policies, which could reduce premiums by up to 50 percent;
> Exempting high deductible health plans from State mandates would have the same effect as allowing insurers to offer Healthy NY at an unsubsidized rate; and
> Require the Department of Labor and the Department of State to study the costs and benefits of allowing businesses to create innovative and flexible heath coverage plans as authorized under Federal Statute.
Expanded High Tech Investment
The existing Qualified Emerging Technology Credit is an innovative and successful way government can assist high technology businesses to create new jobs. The Senate proposal would remove the December 31, 2011 tax credit sunset date and increase the maximum credit that a company can claim for capital investment and research support from $250,000 to $400,000 per year. Emerging technology firms would receive an additional $20 million a year in reimbursed grants from the State.
Eliminate Wasteful Regulations, Reduce Paperwork & Cut Red Tape
The Senate is proposing the creation of a Regulatory Reform and Competitiveness Commission to review all state regulations for their impact on the state’s businesses. The Commission would include representatives from the large and small business community, as well as local government and labor, and, similar to the Berger Commission, make a recommendation to the State Legislature of regulatory revisions that would become law, unless the State Legislature passed superseding legislation.
In addition, all agencies would be required to identify the economic impact and cost to business of any and all proposed new regulations.
Encourage Hometown Neighborhood Investment
To encourage private sector investment in community revitalization, the Senate’s plan would give municipalities wide authority to exempt improvements from real property taxes.
Under the Senate plan, localities and school districts would be able to determine which community revitalization projects would be exempt, what taxes the project would be exempt from and for how long. Municipalities currently need state authorization to provide tax abatements for development.
This program would be similar to Chapter 370 of the Laws of 2008 which empowered the City of Syracuse to offer real property tax exemptions as a catalyst for new residential construction and the rehabilitation of hazardous vacant residential structures, and would encourage "green" design and construction through enhanced exemptions.
ENCOURAGING CHILDREN TO BUILD THEIR FUTURE IN NEW YORK
Helping Students Afford College – and Keeping Them In New York
This initiative would provide low interest student loans to New York State residents attending an institution of higher education in New York who apply for a loan. The low interest loan would cover the cost of tuition once federal or state financial aid and all additional institutional scholarships or grants are deducted.
In addition, the program would provide a tax credit equal to 10 percent of the loan balance plus interest for graduates that receive loans through this program and are employed in New York for ten years. After ten years, the tax credits would offset the loan balance for graduates who have met the residency and employment requirements. This program would provide an investment of $70 million annually, beginning in SFY 2013-14.
Because the loans would be financed with tax-exempt bonds, interest rates would be reduced by roughly 50%. This would benefit approximately 95,000 students in the first year.
The Senate Majority plan would provide state subsidized, low-interest loans to help families and young people achieve their dreams of a college education, while also providing incentives for them to remain in New York State.