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Budget proposal would help more than 19,000 North Country businesses with lower taxes, Cuomo says

Posted 1/7/16

Gov. Andrew Cuomo claims 19,271 North Country businesses will benefit from the business tax proposals he is making for this year’s legislative session. Those are part of a series of what he is …

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Budget proposal would help more than 19,000 North Country businesses with lower taxes, Cuomo says

Posted

Gov. Andrew Cuomo claims 19,271 North Country businesses will benefit from the business tax proposals he is making for this year’s legislative session.

Those are part of a series of what he is calling “signature proposals” in his 2016 agenda, which include “investments and initiatives designed to continue growing the economy and building stronger, more vibrant communities across New York State,” a press release from the governor’s office said.

“These proposals include significant tax relief for small businesses, increased funding to support municipal water infrastructure improvement projects, a new effort to revitalize and transform downtown areas in each region of the state, and a sixth round of the successful Regional Economic Development Council initiative” the release said.

Small businesses are the backbone of the state’s economy, accounting for 43 percent of all private sector jobs in New York.

The governor’s latest proposal is projected to save small businesses $298 million annually, bringing the total savings statewide from the governor’s business program to nearly $1.2 billion by 2021.

His plan would lower taxes both for small businesses who pay via the corporate tax and those paying through the personal income tax.

For small businesses that file under the corporate tax code, the governor proposes to reduce the net income tax rate from the current 6.5 percent to 4 percent effective January 1, 2017. For the purpose of this tax cut, the definition of “small business” is a business with less than 100 employees, with net income below $390,000.

Small businesses have traditionally paid a lower rate than large corporate taxpayers, but tax cuts passed in 2015 lowered the corporate tax rate to the level currently being paid by small businesses. Cuomo proposes to preserve the small business tax advantage by lowering their rate even further. To avoid a “cliff,” the lower tax rates would be available to small businesses having less than $290,000 in net income, and the rate would be phased up to the standard rate applicable to businesses with net income of $390,000 or more.

For small businesses whose members pay taxes via the personal income tax, Cuomo proposes new and expanded tax cuts. Sole proprietor and farm small businesses now can subtract five percent of their income from tax calculations. The governor proposes to increase the exclusion to 15 percent of income. Further, in order to create tax parity between small business types, Cuomo’s budget plan also expands this tax cut to other types of small businesses, the press release said. Members of partnerships, S-corporations, and LLCs will be able to exclude 15 percent of business income as long as some of their business income is derived from a business entity with less than $1.5 million in New York gross receipts, and their total business income from these sources is below $250,000.

The governor’s office estimates that about 1,091,000 small businesses statewide will benefit from his proposals. That number includes 19,271 small businesses in the North Country region, the governor’s staff estimates.

Cuomo’s budget also includes $250 million for drinking water and wastewater infrastructure projects across the state, with half distributed to municipalities this year and the remaining half in 2017. Allocations will be administered by the Environmental Facilities Corporation, and the Departments of Health and Environmental Conservation.

In spite of the nickname “Hunger Games” given to Cuomo’s competitive regional economic development funding approach, he proposes continuing this regional economic development approach with $950 million in the 2016-17 state budget for a sixth round of those awards and runner-up awards. He proposes that it include $750 million to be split competitively among each of the state’s ten regions, and $200 million to fund top projects for the runners up from last year’s special awards.