Small Business Assistance Package Passes Senate With Senator Golden's Support

Martin J. Golden

February 13, 2007

Albany- State Senator Martin J. Golden (R-C, Brooklyn), a former President of the 5th Avenue Board of Trade Merchant Association, today joined his colleagues in the New York State Senate in approving a small business and manufacturing assistance plan (S.1456), sponsored by Senate Majority Leader Joseph L. Bruno, that targets the biggest concerns that hold back small businesses from growing and creating new jobs. The plan would provide $590 million in assistance in the first year and almost $1.3 billion in tax relief and assistance to small businesses when fully implemented after three years.

"Right now, too many of our young people are leaving our communities because they do not think our state will provide them with the kind of careers they want or provide a good living for their families," Senator Bruno said. "Our small business assistance package represents pro-growth, pro-job policies that will lower taxes, provide new economic incentives and make it much easier for young people and families to stay in New York because they will see a future here.

"The Governor’s proposed budget does not include any tax relief or assistance to help small businesses grow and create jobs," Senator Bruno said. "The Senate is fighting to do everything possible to give small businesses the opportunity to grow and to create new jobs in New York State. Just as small businessman have a can-do spirit to succeed, we need a can-do spirit to help them."

The Senate plan would eliminate the corporate income and franchise tax for manufacturers; provide direct property tax relief checks to small businesses; provide tax relief for businesses that pay under the personal income tax; and provide tax credits to offset the high cost of energy.

"Small businesses are the fabric of our communities and New York’s economic engine is dependent upon their success," Senator Marty Golden said. "It’s imperative that we ease the regulatory burden and provide tax relief in order to allow small businesses to prosper and thrive in this global economy."

The Senate small business assistance plan includes:

> Eliminating the income tax and corporate franchise tax on manufacturers, regardless of size, providing $550 million in tax relief;
> A $350 million refundable tax credit to help 386,000 small businesses, that employ 20 people or less, with rising energy costs;
> Reducing Corporate Franchise Tax rates from 7.5 percent to 6.85 percent, saving businesses $150 million;
> Creating a Small Business STAR program to provide direct rebate checks, averaging $700, to small businesses that pay school taxes and employ less than 20 people, providing $150 million in property tax relief;
> Expanding incentives to encourage emerging technology companies that do research and development in New York, to also manufacture their products in New York; and
1 > $20 million in relief through reforms of the corporate franchise tax.

The Senate Majority has initiated tax cuts and reductions that have provided taxpayers with a cumulative savings of more than $126 billion. This package would build on the Senate’s record by specifically targeting small business job growth.

The Senate Majority small business assistance plan includes the following:

Cutting Business Taxes

According to a recent Business Council document "Benchmark New York State," corporate income taxes in New York State are 133 percent above the national average. The Senate business tax cut and assistance package would:

Eliminate Income and Corporate Franchise Taxes on Manufacturing -- This proposal would eliminate taxes on business income for manufacturers whether a manufacturer files as a corporation under Article 9-A or as a partnership or limited liability company under the Personal Income Tax (Article 22). It is estimated that this proposal to eliminate these taxes would save manufacturing companies in New York $550 million annually.

Reduce Corporate Franchise Tax Rates -- Reduce the net income rate from 7.5 percent to 6.85 percent over a three year period. This reduction in taxes would have a positive affect on all businesses, while attracting new businesses, supporting existing businesses and creating more jobs. This would save New York companies $150 million annually.

Small Businesses STAR Property Tax Rebates --
This plan establishes a Small Business STAR program that would provide direct property tax rebate checks to small businesses that pay school property taxes and employ no more than 20 people. Much like STAR and the STAR rebate program, businesses will be able to get a rebate check on the school taxes paid on the first $30,000 of market value of their business property. It is estimated that the average rebate check would be $700, with a value of $150 million in property tax relief.

"New York's small businesses create the majority of jobs in this state, and they need relief from climbing school taxes," Senator Marty Golden stated. "The 'Small Business STAR' proposal offers a tax break that will strengthen mom and pop businesses and encourage them to invest in new jobs, to expand and grow here in New York."

Eliminate S-Corp Differential (Eliminate Multiple Tax Calculations) --
Although many small businesses pay income taxes under the personal income tax, they are required to compute their tax as if they paid under the corporate franchise tax. These businesses are required to pay a differential equivalent at the fixed dollar minimum under the corporate franchise tax resulting in duplicative and redundant tax calculations and filings. This proposal would eliminate this tax on the State's small businesses. This would afford New York's small businesses $20 million to invest in the New York economy and eliminate this burdensome computation and filings. As a result, small businesses would only be subject to the personal income tax as they are in a majority of the other states.

Commercialization of Centers of Excellence and Genesis Centers Research --
The Senate is proposing an initiative that will bridge the divide between State-sponsored Research and Development and manufacturing in New York State. The current tax law penalizes companies that have created R&D jobs in the State from manufacturing in New York State. The Empire Zone program does not afford those companies to be treated as a new business, discouraging expansion in the State.
At a time when the company is looking to expand in New York, the tax code should encourage a company to continue to expand and invest in New York. A business that is connected through the State’s premier academic and business incubators for research and development will now be afforded refundable wage and investment tax credits to lure the manufacturer of that advanced technology to the State.

Reducing Business Costs

The Senate advanced several proposals to reduce the cost of doing business in New York State, including:

Energy Cost Assistance --
Energy costs were cited by 41 percent of the Business Council survey as one of the top four concerns. Benchmark indicates that energy costs are 58 percent above the national average. Small business owners have cited increasing energy costs as one of the biggest problems they face in staying competitive. The Senate small business plan would address that concern by providing a $350 million refundable tax credit program that would help 386,000 eligible small businesses across New York State afford the rising cost of energy. Under the plan, a business with 20 or fewer employees can receive a credit of two cents per Kilowatt Hour (KwH) that would be applied directly to eligible businesses' tax liability, while businesses that do not owe taxes would receive a rebate check.

"The high cost of energy limits many local businesses from being able to expand and forces others to make cuts," said Senator Marty Golden, "This plan will give small businesses, and the 1.4 million people they employ, the help they need to remain economically competitive, to protect jobs and even create ones, and to grow their businesses."

Additional Businesses Tax Relief and Incentives
Businesses in New York not only pay income taxes, but pay taxes in many other forms. The Senate has drafted, as a part of our SFY 2006-07 tax package, several proposals to further ease the tax burden on the state’s businesses.

Sales Tax Exemption for Businesses Located in Academic Incubator Facilities --
Companies located in academic incubator facilities would receive a state sales tax exemption for the purchase of equipment costing $500 or more. Localities would be able to opt into this exemption as well. These companies, by nature, are small and have limited resources. The sales tax exemption would reduce equipment costs, which can be an impediment to the success of these small businesses. This proposal would save companies $500,000 annually in state taxes and twice that if all localities opt into the exemption.
Eliminate Petroleum Business Tax (PBT) on Non-Residential Heating Fuel -- Current law provides a full exemption from State taxes on petroleum fuel sold for residential heating purposes and a partial exemption for petroleum fuel sold for nonresidential heating purposes. In an effort to continue to provide relief to businesses in our State, this part would fully exempt petroleum fuel sold for nonresidential heating purposes. It would further reduce energy expenses for small businesses by $7 million annually.

"The Senate Majority plan received praise and support from many business organizations throughout the State because it will help them grow and create jobs," Senator Bruno said. "We have fought for billions of dollars in tax cuts over the years and we still need to do more. We will work hard to deliver a result that pays off for businesses, jobs and our economy."