Cuomo proposes $298 million tax cut for small businesses
In an effort to build what he called “stronger, more vibrant communities” across New York, Gov. Andrew M. Cuomo proposed a tax cut for the state”™s small businesses, one that he estimated would save them $298 million annually.
Under the proposal, small businesses with fewer than 100 employees and a net income below $390,000 would see their net income tax rate reduced from the current 6.5 percent to 4 percent, effective Jan. 1, 2017.
Those that pay through personal income tax, including sole proprietor and farm small businesses, would be eligible to subtract 15 percent of their income from tax calculations. The rate is currently 5 percent.
In addition, Cuomo proposed extending the tax cut to partnerships, S-corporations, and LLCs. They too could take advantage of the 15 percent tax cut as long as some of their income is derived from “a business entity with less than $1.5 million in New York gross receipts, and total business income from these sources is below $250,000.”
Cuomo said the most recent proposal, coupled with other small business tax cuts he has introduced since taking office five years ago, would save small businesses $3.8 billion by 2021. Cuomo called his proposed tax cuts, which would impact roughly 1.09 million small businesses, an effort to “continue growth of the small-business sector and help further the expansion of New York”™s economy.”
Of that figure, Cuomo”™s office said 134,863 small businesses are in the Hudson Valley. In its 2012 county business patterns and 2012 Economic Census report, the most recent such study, U.S. Census Bureau found that Westchester had 873 small businesses with a total employment of 58,854.
In a statement, Business Council of Westchester President and CEO Marsha Gordon and Executive Vice President and COO John Ravitz said they were “pleased” by the enhanced tax credits for small businesses, and said the organization”™s 2016 legislative agenda would continue to press Cuomo”™s office for further mandate relief.
“We will also evaluate the impact of an increased minimum wage especially to small businesses as well as paid family leave,” their statement read.
Cuomo has proposed phasing in a $15 per hour minimum wage by 2021.
Mike Durant, the state director of the National Federation of Independent Businesses, said he saw the minimum wage increase and small business tax cuts as linked, adding that the former would slow any momentum that tax relief creates. He said he anticipated a tremendous net negative despite the hundreds of millions of dollars the cuts are expected to save businesses each year.
“I think looking at the issue singularly, the tax cut for small businesses is a terrific first step toward finally reducing the tax burden on small businesses,” Durant said. “Unfortunately you can’t look at that and not look at the governor’s proposed minimum wage increase. In no way does the tax cut offset the dramatic increase in labor costs that small businesses will face.”