Executive Budget: Small Business Tax Cuts

May 6th, 2020

February 24, 2020

RE: Executive Budget Proposal Article VII, REV Part D

MEMORANDUM IN SUPPORT

Unshackle Upstate, a non-partisan, pro-taxpayer, pro-economic growth, education and advocacy coalition made up of business and trade organizations from all parts of Upstate New York, support these small business tax cuts with hope the proposal can be modestly expanded.

New York’s high taxes have hindered the state’s economic growth and contributed to population loss, particularly in communities throughout Upstate. According to the non-partisan Tax Foundation, New York currently has the 2nd worst business tax climate in the nation. Unshackle Upstate supports efforts to improve our business climate by providing tax relief for businesses that drive our economy.

The Executive Budget proposal includes language to reduce the tax rate for qualified small businesses. Specifically, the Executive Budget includes four amendments intended to alleviate the tax burden on small businesses:

• Reduce the corporate franchise tax rate on business income from 6.5% to 4% for qualifying small businesses.

• Allow the investment tax credit to be refundable for taxpayers that are eligible farmers.

• Increase the allowable deduction provided to small businesses and farms for net items of income, gain, loss and deduction entering into federal adjusted gross income from 5% to 15% of those items

• Eliminate the estimated tax underpayment penalty for New York S corporations from 6.5% to 4% and the expand the income exclusion for qualified sole proprietorships and small farms to 15% of business income.

The inclusion of this proposal is welcome news for many of the state’s small businesses and farms. We thank the Governor for making tax relief for small businesses a priority in his recent budget proposal. While this is a welcome step, we believe the benefits of this proposal can be modestly expanded to include all types of small businesses, increasing the impact it would have on improving the business climate for all of New York’s independent employers.

Unshackle Upstate supports S.5954 (Kaplan) / A.6309 (Schimminger) which would expand this proposal and provide long awaited tax relief to all sectors of the economy.
This legislation expands the 15% income exclusion to LLCs, LLPs and S-corporations, allowing every small business to realize the benefits of the Executive Budget proposal. Enacting this legislation would improve our overall business climate and help move the Upstate economy in the right direction.

For these reasons, Unshackle Upstate supports the enactment of these tax cuts and encourages the Governor and Legislature to expand them to include all types of small businesses.

Contact:
Michael Kracker, Executive Director
716.541.1755
Michael.Kracker@unshackleupstate.com