Comprehensive Plan Cuts Taxes for 4.4 Million New Yorkers; Reduces Taxes on Manufacturers; and Invests in Job Creation
Senator Alesi joined Senate colleagues yesterday to pass the Middle Class Tax Cut and Job Creation Plan that will reduce taxes for millions of hardworking, middle-class taxpayers. Passed with strong, bipartisan support, the comprehensive agreement will reduce the tax rate for middle class families to their lowest rate in more than 50 years and create thousands of private sector jobs. The plan will provide a total of more than $3.3 billion in tax relief to individuals and businesses.
In addition the bill (S.50001, S.50002): cuts taxes paid by manufacturing companies; encourages job retention; invests in infrastructure improvements; addresses flood relief and recovery; eliminates tax indexing; and sets aside additional money in state reserve funds.
“As Chairman of the Senate Committee on Commerce, Economic Development and Small Business, I know that we need to do everything possible to revitalize our economy, give businesses the opportunity to succeed and create new economic opportunities for all New Yorkers,” said Senator Alesi. “The Middle Class Tax Cut and Job Creation Plan follows a successful 2011 Legislative Session during which bipartisan action led to important steps for New York – including reducing state spending by 2 percent and eliminating a $10 billion deficit. The plan is a complete dismantling of the tax increases seen in previous years and provides real tax cuts for hardworking, overburdened taxpayers – saving 99 percent of New Yorkers money. Once again, I commend Governor Cuomo for his leadership in pursuing two of my top priorities: cutting taxes and creating jobs in New York State."
Under the new rate structure, 4.4 million middle-class tax payers will receive $690 million in personal income tax relief – allowing them to save, spend and invest more of their hard-earned money. All taxpayers will see a tax reduction or no change compared to their previous tax bill. The corporate tax rate on manufacturers outside of the MTA region will be cut in half, providing $25 million in tax savings – which will ultimately allow those businesses to use the savings to create new jobs.
The Middle Class Tax Cut and Job Creation Plan is supported by major business organizations across the state including: The Business Council of New York State; Unshackle Upstate; the Long Island Association; the National Federation of Independent Businesses; the Partnership for New York City; and the New York Farm Bureau.
Highlights of the Middle Class Tax Cut and Job Creation bill include:
MIDDLE CLASS TAX CUT
Approximately 4.4 million middle-class taxpayers will receive $690 million in personal income tax relief, allowing them to save, spend and invest more of their hard-earned money. After these tax reforms are implemented, middle-class taxpayers will pay the lowest tax rate in more than 50 years.
MTA PAYROLL TAX REPEAL
This plan repeals the devastating MTA payroll tax for about 78 percent, or more than 704,000, of the business entities that currently pay it. This includes eliminating the tax for 290,000 employers with payrolls of less than $1.25 million; 415,000 self-employed taxpayers; and all public and non-public schools.
TAX CUT FOR MANUFACTURERS
The corporate tax rate on manufacturers outside of the MTA region will be cut in half, providing $25 million in tax savings, a major boost for job creation. Senate Republicans have long championed lower taxes for New York’s manufacturers as a way to create jobs.
ELIMINATE TAX INDEXING
Under the provisions of this bill, income brackets and the standard deduction will be adjusted for the rate of inflation, eliminating “bracket creep,” and providing about $440 million in tax savings over two years for every New Yorker that pays the personal income tax.
PERSONAL INCOME TAX SURCHARGE ELIMINATION
The bill eliminates the PIT surcharge, enacted by Democrats in 2009. Ninety-one percent of taxpayers currently impacted by the surcharge will receive a tax cut. Rates would revert back to the lower rate they paid prior to the enactment of the surcharge.
$50 million in additional relief will be provided for areas affected by the recent flooding. A job retention tax credit will also be extended to businesses harmed by a natural disaster within the last year.
CAPITAL INVESTMENTS AND JOB CREATION
A new $1 billion infrastructure fund has been established to rebuild roads, bridges and other infrastructure, and encourage the creation of thousands of related jobs. These investments are expected to leverage $10 billion in capital investments. Projects immediately expedited through the infrastructure fund total $2.6 billion.
Specific investments by the infrastructure fund include replacing bridges, rehabilitating dams and flood control infrastructure, rebuilding water systems, renovating parks and projects that support regional economic development plans.
INNER-CITY YOUTH EMPLOYMENT
The bill includes $37 million in funds for job readiness training for inner-city youth and provides $25 million in tax credits for employers who hire unemployed youth.
SETTING ASIDE MORE MONEY IN RESERVES
The plan sets aside $1.5 billion, completely unspent and held in reserve for economic uncertainties and to help support: job creation; local government mandate relief; ensure funding for education and health care; and closure of budget gaps.