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Senator Bruno and colleagues from the Senate Majority Conference unviel their $1 billion tax cut package today at the Capitol Building. |
Tuesday, June 15, 2004
Senate Majority Leader Joseph L. Bruno and members of the Senate Majority Conference today unveiled a billion dollar tax cut package aimed at stimulating job and economic growth, as well as helping families meet health care and other needs. Highlights of the tax cut plan include a small business health insurance tax credit, tax incentives tied to the Senate�s proposed Excell-NY program to encourage job growth in high technology and life sciences industries and tax credits to reinvigorate the film and television production industry in New York City.
The Senate Majority tax cut plan would invest more than one billion dollars, when fully implemented, in business growth, job creation and economic development, as well as providing important tax breaks for families. The first year of the tax cut plan totals $56 million (SFY 2004-05).
"Some critics might say it�s late in the session to be talking about tax cuts, but there is never a bad time to cut taxes," Senator Bruno said. "With our package we�re helping small high tech and biotech firms stay and grow in New York and create new jobs. We�re helping small businesses afford the cost of providing health insurance to their employees. We�re helping families that have to take care of elderly loved ones in their home. As we move forward on a new budget, we will work to see that it includes these tax cut provisions.
"We�ve spent a lot of time this session talking about giving our children the opportunity for a sound basic education, we also have to make sure we have a sound and strong economy so there are good jobs for them here in New York after they get that education," Senator Bruno said.
"These targeted tax cuts will attract investment into some of the fastest growing sectors of our economy and create the type of high-paying jobs we need," said Senator Owen H. Johnson (4th Senate District, Babylon), Chairman of the Senate Finance Committee. "These tax cuts we are unveiling today deserve a place in the final enacted budget."
"Senator Bruno's vision on tax cuts reaffirms what the Republican Senate believes so strongly: tax cuts work!" Senator James S. Alesi (R-C, Perinton), Chairman of the Senate Commerce, Economic Development and Small Business Committee, said.
SUMMARY OF SENATE MAJORITY TAX CUT PLAN
EXCELL-NY
The Senate proposed the Excell-NY program earlier this year to promote venture capital investments in emerging companies, provide information and assistance related to technology transfer, private business development and employee training. Excell-NY includes the following tax incentive programs:
Excell-NY Research and Development Activities Credit - This program creates new incentives for investment in research intensive New York State companies operating on the cutting edge of commercial applications for high technology and life sciences products. The tax credits will aid high technology firms looking to grow out of a New York State academic incubator that hope to remain in the state, or new or existing companies that are looking to relocate to or further expand in New York State. It is estimated that there are currently about 400 firms in New York State that would be eligible for the credit and that the credit will save these growing businesses $60 million a year.
Excelsior Angel Investor Program - This proposal is designed to encourage venture capital companies to invest in Certified Excell-NY Enterprises (CEE�s) and to connect New York State�s globally preeminent large scale technology and pharmaceutical firms with cutting edge high technology businesses. The program will be modeled after New York State�s existing certified capital company (CAPCO) credits, but will have large scale manufacturers with a research and development focus, rather than insurance firms, invest funds in venture capital companies. Under this program, $200 million in investment funds will be provided and large manufacturers will realize a tax savings of $20 million a year beginning in State Fiscal Year 2005-06.
The Excell-NY program resulted from recommendations made by the Senate NextGen Task Force, Chaired by Senator Dean Skelos (R-C, Rockville Centre).
"The NextGen Task Force worked to develop a comprehensive strategy to transform New York�s scientific excellence into new companies and quality jobs," Senator Skelos said. "The tax incentives that are part of the Senate�s Excell-NY initiative will create the competitive environment necessary to attract, retain and grow these dynamic new industries and establish New York State as the preeminent location to do business in the 21st Century."
SMALL BUSINESS HEALTH INSURANCE TAX CREDIT
The Senate has proposed a comprehensive plan to make health insurance more affordable and to provide coverage for hundreds of thousands of New Yorkers who are uninsured. The centerpiece of the Senate plan is a health insurance tax credit that would encourage more small businesses to provide health insurance for their employees and would make health insurance more affordable for individual purchasers.
The Senate is proposing a tax credit of 50 percent of the cost of health premiums to small businesses with 50 or less employees who offer health insurance to its employees. It will also authorize HMOs and insurers to offer "Freedom Policies," which will offer policies that cost 40 percent less than a typical policy. This plan would save small businesses $665 million when fully implemented in year four.
"Many employers are dropping coverage after five straight years of double digit premium increases and a full 100 percent increase in costs since 1999," Senator Seward, Chairman of the Senate Insurance Committee, said. "It is estimated that for every one percent increase in insurance premiums nationally, 400,000 more people may become uninsured. That figure translates to about 30,000 more uninsured New Yorkers. With our plan, the Senate is taking a comprehensive, multifaceted, approach to ensure that New Yorkers can afford health insurance, that they have choices and access to the care they need for themselves and their families."
The Senate is also proposing other measures related to health care and insurance, including a tax credit to help working New York families who care for elderly loved ones in their homes. The $70 million Caregiver Assistance Act would provide a tax credit of 20 percent of the expenses incurred for the in-home care of an elderly relative, up to $2,400 a year, and provide a prorated enhanced STAR property tax credit for "in-law" apartments.
"The largest amount of care provided to seniors in New York is provided by family," Senator Golden said. "The purpose of this proposal is to provide not only a recognition of what has been termed the 'love-equity' provided by these care givers for their senior relatives, but also to provide an incentive for more families to provide the care, and to encourage families currently providing the care to continue to do so for longer periods."
A recent study by the Center For Aging Policy Research, State University Of New York At Stonybrook, estimated the number of caregivers in New York at 734,000, providing an average of 22 hours of care per week. The study estimated the value of this care at $11.2 billion annually.
Also part of the tax cut package is a plan to increase the Long Term Care Insurance credit from 10 percent to 20 percent of long term care insurance premiums, saving taxpayers $18 million.
FILM STUDIO TAX CREDIT
New York City used to be a prominent site for film and television production. In recent years taxes and production costs forced the industry to move production elsewhere. This part will offer a 10 percent credit for production costs for new film and television series that are produced in New York State to reinvigorate this important industry within the state.
ENERGY TAX CUTS
In an effort to reduce our dependence on foreign petroleum, this proposal will provide a 20 cent per gallon tax incentive for New York State biofuel production facilities. Biofuel includes ethanol, biodiesel, and other alternative organic fuels that are manufactured from corn, soybeans, beets or other agricultural products. In addition, an incentive for the installation of state of the art pollution control equipment for biofuel plants would also be provided. The bill would save biofuel consumers $20 million a year by State Fiscal Year 2007-08.
"A production tax credit for the biofuels industry would directly result in economic growth and job creation in Central and Northern New York. This initiative could be an incentive applicable to the proposed ethanol plant in Volney and biodiesel plant in Canton. It will indirectly provide a boost to our agricultural communities. The enactment of the biofuels tax credit, coupled with additional Senate tax incentives, will provide a stimulus to New York�s economy," said Senator James Wright (R-C-I, Watertown), Chairman of the Senate Energy and Telecommunications Committee.
The Senate plan also includes $15 million in tax incentives to businesses that install and operate alternative energy systems. In order to relieve pressure on the State�s electrical grid, to reduce the State�s reliance on imported petroleum and natural gas, and to protect the State�s environment, this proposal would offer a credit to businesses that install and operate alternative energy systems. Credits would be granted for solar power, wind generation and fuel cells that business utilize to supplant their energy needs. Business taxpayers will save $15 million a year by moving to alternative, clean power.
"It is imperative that we reward those companies in our state who work to protect both our environment and our energy supply," Senator Charles Fuschillo (R-C, Merrick) said. "This incentive will make conservation a priority, and it is another job creating tax cut for New York State."
In addition, the Senate plan includes a $500 residential petroleum tank tax credit to make the existing credits refundable. It�s estimated this would result in up to $2 million in taxpayer savings during the 2004 tax year.
"The environmental benefits of this tax credit were immeasurable. Yet, many homeowners, like seniors and those on fixed incomes, ended up paying the entire cost of upgrading to a new heating tank without the benefit of a tax credit to offset the costs," said Senator John Flanagan (R-C, Northport). "This plan would end the disparity and finally provide the same financial benefit to those who could least afford the cost of a tank replacement. Most importantly, it helps to further protect our environment and groundwater supplies."
AVIATION INDUSTRY TAX CUTS
The Senate proposal would strengthen the state�s aviation services industry by cutting taxes that make these companies less competitive. Currently, the petroleum business tax is applied to all aviation fuel used when the points of departure and landing are within the state, and on fuel used during takeoffs for interstate flights. This puts intrastate airlines and small commuter airlines at a
competitive disadvantage.
The Senate supports eliminating the tax on aviation fuel used after takeoff and proposes that the PBT on all kero-jet fuel and aviation gasoline be eliminated next year, saving the aviation industry $9.5 million annually.
"This measure is necessary for the commerce flow in New York State," said State Senator Mary Lou Rath (R-C, Williamsville). "In order to maintain a competitive balance, airlines that operate in New York State should not be burdened by taxes that may prohibit them from doing business in our state. Eliminating the kero-jet fuel tax will help to fuel our economy."
Aviation repair services and machinery used on commercial aircraft are exempt from New York sales taxes, but private aircraft repairs and service are not. Many other states (New Hampshire, New Jersey, Connecticut, Massachusetts, Delaware and Florida) have eliminated the sales tax on private aircraft repairs. This package proposes the exemption of private repair services from the sales tax to encourage owners of private aircraft to have repairs done by businesses in New York, rather than in neighboring states.
In addition, the Senate tax cut plan would:
> Eliminate the Alternative Minimum Tax for farms and refund the investment tax credit, providing $2 million in critical capital to the State�s farm community;
> Offer a 15 or 25 percent credit to provide taxpayers/homeowners with an economic incentive to help revitalize older neighborhoods by providing a state tax credit for rehabilitating or purchasing an historic home;
> Eliminate the Alternative Minimum Tax for farms and refund the investment tax credit providing $2 million in critical capital to the state�s farm community;
> Provide a sales tax exemption on the value of coupons. At present, a consumer is taxed on the full purchase price of a good without consideration of savings from manufacturers coupons. This initiative would ensure that buyers of goods and services must only pay state sales and use tax on the purchase price after it has been reduced by any coupons, saving consumers $15 million;
"Smart shoppers know that clipping coupons and taking advantage of immediate rebates can add up to real savings. Unfortunately, under current law they are still paying tax on the full price-- not the discount price," Senator Caesar Trunzo (R, Brentwood) said. "This proposal would ensure consumers do not pay taxes on money they do not spend, and it will enable them to keep more of their hard-earned money."
> Phase out changes on the life insurance tax made in SFY 2003-04 which have hit the domestic life insurance industry particularly hard. The Senate Majority is proposing a multi-year phase-out of the insurance tax increase which would save $48 million when fully effective;
> Offer an investment tax credit to textile remanufacturers for investing capital in New York State. With over 10,000 employees statewide in this capital intensive industry, it is important to encourage further expansion of this industry in New York State by offering the same credits that the State offers other manufacturers; and
> Exempt the service of inflating tires from coin operated machines from the sales tax. This will reduce taxes by a minimal amount but will more importantly eliminate the administrative burden of remitting the taxes to the state.
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