New York Gov. Andrew Cuomo wants a phased-in, four-percent tax reduction for small businesses and a set of new resources for small-business owners who are working to start or grow their companies.
The small-business tax reduction, which the governor’s office announced in a news release on Sunday, represents the sixth element of Cuomo’s “2015 Opportunity Agenda.”
Small businesses account for 43 percent of private-sector employment and 35 percent of private-sector wages in New York state, according to the release. The governor calls small-business activity a “vital” part of the state’s economy.
(Sponsored)
Insurance Rates: What is really going on with these premiums and why they seem to be increasing!
This is a question we continuously get asked at CH Insurance. Clients with a good loss history, timely payments, excellent credit, and very good policies and procedures. All across the
Small Business Accounting Errors and How to Avoid Them
Running a small business presents many challenges, which can draw your attention in multiple directions at once. Keeping track of your company’s finances is essential to its long-term success and
Cuomo’s proposed tax cut would put small-business tax rates in the Empire State at “their lowest rate ever,” his office said.
It would reduce the net-income tax rate from the current 6.5 percent to 2.5 percent over a three-year period for small businesses that file under the corporate-franchise tax.
The proposal calls for reducing the rate to 3.25 percent for tax year 2016; to 2.9 percent for tax year 2017; and to 2.5 percent for subsequent tax years beginning in 2018.
Cuomo’s office contended that the proposal would provide $32 million in new tax relief when fully effective, according to the news release.
For 2015 tax year, current law provides a “moderately lower” corporate-franchise tax rate for small businesses than for large ones. Those rates are 6.5 percent versus 7.1 percent, according to the governor’s office.
The small-business advantage in tax rates was scheduled to disappear in tax year 2016 when the overall corporate-tax rate falls to 6.5 percent, which was part of Cuomo’s tax-cut package enacted with the 2014-15 state budget.
Under the proposal announced Sunday, small businesses will continue to have “significantly lower” tax rates than large businesses.
For the purpose of this tax cut, the definition of “small business” is a business with less than 100 employees and having a net income less than $390,000, according to the governor’s office.
To avoid a “cliff” and stay consistent with how the current law treats dual rates, the lower tax rates would affect small businesses generating less than $290,000 in net income. The law would also phase up the rate to the standard rate applicable to businesses with net income of $390,000 or more, Cuomo’s office said.
Cuomo will include the tax cuts in his 2015-2016 executive-budget proposal.
Reaction
One leader of a key area economic-development organization applauded the governor’s plan.
“With this proposal, Governor Cuomo is showing a continued commitment to tackling the biggest burdens facing businesses today, including the taxes and red tape that have hampered small business growth for years. By improving the overall business climate and providing relief to the thousands of hardworking small business owners across the Mohawk Valley, companies will have better bottom lines that allow for more reinvestment in growing their operations and workforce — leading to more jobs and a stronger economy,” Steven J. DiMeo, president of Mohawk Valley EDGE, said in a statement issued today. ”When local small businesses thrive, they create economic opportunities and strengthen both our economy and communities; and I applaud Governor Cuomo for putting forth a proposal that will create an environment for companies to flourish in Upstate New York.”
NY Business Express
Cuomo also announced the creation of NY Business Express, a one-stop shop to help small businesses launch and grow. The program will offer a “game-changing” approach to small-business growth and an “innovative” way of cutting red tape, the governor contended.
Businesses that require multiple licenses and permits to operate in New York must navigate a “labyrinth of state agencies,” and about 70 percent of the information that applicants request is “duplicative” between the various agencies involved.
The process creates a “confusing and uncoordinated” process for the applicants and results in “duplicative work and record-keeping” for state agencies, according to the governor.
To simplify the process, Cuomo said he wants New York to create a single, “user-friendly,” online portal for all business and occupational-licensing activities. It would include a new consolidated business application and access to incentives and other support services.
Besides the portal, the proposal also includes a single phone number for all questions and support services; and single, cross-agency business formation and license-processing team.
Applicants would provide their basic information once, using a “simple” user interface that drives the process and guides individuals step-by-step.
“How-to” videos, an incentive finder, click-to-chat, and a single phone number will allow businesses to access the help and information they need “without confusion or delay,” Cuomo’s office said.
Besides the tax cut and NY Business Express proposals, Cuomo also wants to appoint the state’s first chief small-business officer.
This position would be responsible for inter-agency coordination of all existing and new policies that influence creation and growth of New York small businesses, Cuomo’s office said.
Cuomo also plans to host a small-business summit that “cuts across” different industry sectors to focus on issues similar to the typical small-business proprietor. The event will bring together small-business owners, financial institutions, support industries, and government stakeholders to help facilitate access to capital; reduce regulatory barriers; and grow employment and investment at small businesses.