NYLON – Members of the New York State Senate Republican Majority have revealed the first part of their one-house budget proposal and broad-based tax cut plan that is intended to cut taxes for the middle class, seniors, and small businesses.
According to a press release from Senator Patrick Gallivan, the plan creates a new 25 percent rate reduction for middle class taxpayers, new tax savings with the goal of preventing seniors from leaving New York, and significant tax cuts for small businesses and farms.
“High taxes hurt our families and discourage economic development,” said Sen. Gallivan. “By providing meaningful tax relief, we can improve the quality of life for hardworking New York families and seniors. These cuts will also encourage small businesses to grow and create jobs, making New York a better place to live, work and raise a family.”
Gallivan said that the highlight of the Senate Republicans’ tax plan is the new Middle Class Income Tax Relief Program that establishes the lowest middle class tax rate in more than 70 years.
“Starting in 2018, a total of 5 million eligible taxpayers, including more than 770,000 small businesses who file under the Personal Income Tax would begin seeing savings,” said Gallivan. “When fully implemented in 2025, middle class New Yorkers will pay a 25 percent lower tax rate and are expected to save $3.5 billion in taxes each year.”
The Senate Republicans’ budget proposal also includes new income tax breaks intended to help seniors save money and choose to stay in New York during retirement. If passed, the tax cut would provide the first increase to the exempt amount of private pensions and retirement income since 1981, with the intention of saving approximately $275 million annually when fully phased in.
Their plan will also expand small business tax cuts that were enacted in 2013 to provide even more tax relief to help entrepreneurs grow and create jobs. The Senate successfully advocated for the inclusion of a Personal Income Tax (PIT) exemption for small businesses and small farms in the 2013 budget. This year eligibility to receive the tax savings would be significantly expanded. Once fully enacted, the cuts are expected to save small businesses and small farms $494 million annually.
The proposal expands the eligibility of a small business to include any business that files under PIT regardless of how the business is structured; raises the income eligibility threshold from $250,000 to $500,000 when the business entity income is less than $1.5 million; eliminates the employee requirement; increases the exemption from 5 percent to 15 percent for small business income and from 5 percent to 20 percent for farm income; increases the Corporate tax threshold from $390,000 to $500,000; and reduces the Corporate business income rate for small businesses from 6.5 percent to 2.5 percent over two years.
The Senate Republicans’ plan is intended to fully eliminate the 18-a Utility Tax Surcharge. In 2009, the utility tax surcharge cost ratepayers nearly $600 million annually. In 2013, the Senate successfully fought for a phase-out of the assessment, saving ratepayers $455 million over the five-year phase-out period. In 2014, the Enacted Budget contained an additional $600 million in savings over the remaining phase-out, which is scheduled to be completed by the end of 2017. The Senate’s budget proposal would permanently eliminate the 18-a surcharge by the end of 2016 and is expected to save taxpayers $125 million.
The plan is also intended to save on estate taxes to help future generations of business owners. By encouraging small businesses and farms to pass down their business from one generation to the next, the Senate is proposing to speed up the full phase-in of estate tax reform first enacted in 2014. This is intended to allow estates to have a tax exclusion amount equal to the federal exclusion amount when the estate has farm operations or small business property and where the value of the farm operations or small business are a majority of the estate. Starting April 1, 2016, the exclusion would be increased to $5.45 million, resulting in an expected annual savings of $70 million and a $210 million cumulative savings by 2020.
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