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Instruction to Delivery
by Michael Barber
reviewed by:
Kevin Quinn

Editorial

Senate Majority Small Business Assistance Plan
by NYS Senate Majority

Eliminate Income and Corporate Franchise Taxes on Manufacturing
The centerpiece of the Senate Majority’s business tax relief plan is the elimination of the income tax and corporate franchise tax on manufacturers, regardless of size. Average monthly manufacturing employment has dropped from 983,100 in 1990 to 605,700 at the end of 2003, a 38.4 percent decline. When a manufacturing company downsizes, closes or moves out of State, the small businesses that supply and service the company also suffer economically.
It is estimated that the Senate plan to eliminate the corporate franchise tax will save manufacturing companies in New York $550 million. In addition, approximately $50 million will be provided to offset the loss of revenue from reductions in the 17 percent Metropolitan Commuter Transportation district business tax surcharge.

Small Businesses STAR property tax rebates Earlier this year, the Senate Majority announced its REBATE-NY school property tax reduction program that would provide direct rebate checks to school property taxpayers. The Senate small business assistance plan creates a Small Business STAR program that would provide direct property tax rebate checks to small businesses that pay school property taxes and employ less than 50 people. It is estimated that the average rebate check would be worth $650 with a statewide value of $435 million in property tax relief.
Under the Small Business STAR plan, eligible small businesses that are not making payments in lieu of taxes (PILOTS) for school purposes, would be entitled to the basic STAR exemption of $30,000. Businesses receiving a real property tax rebate under the Empire Zone program would not be eligible.

Personal Income Tax Reform for Small Businesses Many small business owners in New York, including S corporations and partnerships, pay personal income taxes. Under the personal income tax, they are subject to a supplemental tax when their incomes exceed $100,000. This supplemental tax eliminates the benefits of the graduated tax schedule that the State employs. As a result, their tax burden increases by approximately $400 to $800. Money that could be invested in expanding their businesses. The Senate Majority proposes to eliminate this supplemental tax on the State's small businesses; allowing New York's small businesses $400 million to invest in the New York economy.
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 and these businesses are required to pay the difference between the two taxes or the minimum tax under the corporate franchise tax.
The Senate plan would eliminate this burdensome computation and small businesses would only be subject to the personal income tax as they are in a majority of the other states. This proposal would return $60 million to New York's small businesses to reinvest and grow in New York.

Helping Small Businesses Afford Health Insurance To help more small businesses afford the high cost of health insurance coverage for their employees, the Senate Majority is proposing an income tax credit equal to 43 percent of premiums paid by small businesses for health insurance. This proposal would save New York’s small businesses $1.7 billion annually. The Senate proposal also includes incentives for Health Savings Accounts.
Over the past five years, there has been double digit premium increases with costs jumping 100 percent since 1999. For every 1 percent hike in premiums nationally, it is estimated that 30,000 New Yorkers lose their health insurance. The Senate is offering a commonsense approach to helping New Yorkers afford health insurance and get the choices and access to the care they need.
As part of HCRA 2000, the Healthy NY small business program was established to enable small businesses to offer health insurance coverage to their employees. However, only 7 percent of New York’s small businesses are able to benefit from this program. The Senate plan would provide additional incentives for small business employers to provide health insurance to their employees.
Small businesses would also be provided with incentives to offer Health Savings Accounts (HSAs) supported by “Freedom Policies”, which are high deductible health plans not subject to the mandated benefits stipulated by New York State Insurance Law. These policies would cost approximately 40 percent less than existing comprehensive policies, have higher deductibles and be coupled with HSAs to help businesses that currently cannot afford to provide health insurance benefits and offer affordable, consumer driven health insurance.
Additionally, the eligibility threshold for Healthy NY would be increased from 208 percent of the Federal Poverty Level (FPL) to 250 percent of FPL to make health insurance more affordable for sole proprietors. All small businesses would be allowed to purchase Healthy NY policies at the unsubsidized full market price.

Energy Cost Assistance
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 that would help 386,000 eligible small businesses across New York State afford the rising cost of energy. The energy tax credit plan was first announced by the Senate last week and 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.
Under the plan, a credit of two cents per Kilowatt Hour (KwH) would be applied directly to eligible businesses’ tax liability, while businesses that do not owe taxes would receive a rebate check. The benefit level of two-cents per kilowatt hour approximates the rate benefit provided under the Power for Jobs program, which has proven to be one of the state’s most important economic development programs.
The Senate plan excludes businesses that already receive similar benefits through the Empire Zone and Power for Jobs programs. It also excludes sole proprietorships working out their residence, since it would be difficult to segregate residential electric usage from business usage.

Cutting Red Tape Hassles and Bureaucracy The Senate Majority small business assistance plan includes a comprehensive proposal to simplify the regulatory burden on small businesses, substantially reduce their paperwork, produce “one stop shopping” to start or expand a small business, and eliminate unnecessary or overly burdensome fees and permits. The four parts of this proposal include:

Expand New York State’s existing Online Permit Assistance and Licensing (OPAL) program to cover all New York State departments, agencies and authorities that require permits, registrations and fees. The Department of State would cooperate closely with the Governor’s Office of Regulatory Reform to ensure that all agencies participate through OPAL. In addition, the Department of State would ensure that a potential business can make all applications at one time and make all payments for initial registration electronically.
Any ongoing fees, registration filings or assessments placed on a business in New York State, after the initial year of placement, will be filed as part of the business’s annual State Tax filing. Businesses could pay all applicable State fees and costs at one time, rather than pay them at different times throughout the year. An electronic filing option will be granted to every such taxpayer at no additional charge.
The State would create a demonstration “311” service to provide small businesses with one easily access number to direct questions and provide assistance to small businesses looking to open or expand in New York State.
The Senate will hold legislative forums around the State to review the regulatory burden on small businesses to identify where the State can do better. A comprehensive review of existing fees, permits and registrations will be conducted to determine which of these burdens are necessary.
Workers’ Compensation Forum
The Senate Labor Committee Chairman, Senator George Maziarz, will hold a public roundtable discussion with labor and business leaders to determine why New York State’s workers’ compensation system is broken and how best to fix it. We will also focus in on how state policies can be changed in order to stop the exodus of quality manufacturing jobs from New York.
The roundtable discussion will be held on Monday, March 13, 2006 at 11:00 a.m. in Hearing Room B of the Legislative Office Building in Albany in order to find a common ground on how to bring about meaningful reform. By reforming the system we can implement cost savings measures for businesses and bring about the first benefit increase in 14 years.