the Most of a Rare Opportunity
2006 - On January 1, 2007, New York State will welcome a
new governor into office for the first time in 12 years.
Although the election’s outcome is still up in the
air, candidates on both sides of the aisle are campaigning
on tough records of reform, and “accountability”
is sure to be at the top of the new governor’s agenda,
no matter which party wins the office.
could be good news for New York CPAs. A changing of the
guard and an accountability agenda could breathe new life
into the state’s fiscal policies. A new set of eyes
in the governor’s office could also provide the NYSSCPA
with the perfect opportunity to advocate for long-overdue
changes to some of New York’s most vexing tax issues.
But before we do so, we must prepare.
this regard, I am especially proud of the work being done
by the Society’s New York, Multistate and Local Taxation
Committee (NYMLT). The NYMLT—one of the Society’s
largest and most active committees—has worked diligently
to prepare for the new governor’s arrival, and recently
formed a policy subcommittee to look at state and local
tax issues and come up with a proactive plan. The NYMLT
will be examining three policies in particular: the income,
sales, and property tax, all of which will be under the
microscope. Big, open questions loom large in all of these
defunct “commuter tax” provides the backdrop
for an important question regarding the state income tax.
From 1966 to 1999, nonresidents working in New York City
paid a tax of 0.45% on their earnings. But when the commuter
tax was eliminated in 2000, the city lost approximately
$500 million in annual revenues. Although the tax has been
dead for more than five years, the question remains: Should
it be reinstated?
the sales tax: New York State’s sales tax rates are
among the highest in the nation; 85% of the state’s
population pays 8% or more in sales tax (state and local).
Sales tax as a percentage of total county revenues increased
from 20.4% to 25.6% from 1994 to 2004, making local governments
especially vulnerable to an economic downturn. These statistics
invite the question: Is New York too reliant on sales tax
for revenue? If so, what should be done about it?
but not least, the property tax: New York State’s
overall tax burden is the highest in the nation, and high
local property taxes are the primary cause. The School Tax
Relief (STAR) program, which exempts a certain amount of
a homeowner’s property value from school property
taxes, thereby reducing the overall tax bill, provides some
relief. But should the STAR program be modified or scrapped
entirely in favor of a new property tax relief program?
other questions come to mind: For example, how will our
new governor balance the delicate relationship between federal
and state taxes? The federal alternative minimum tax (AMT)
continues to apply to more and more New Yorkers each year.
What impact will this ever-expanding tax have on our state
in the future? In addition, New York State recently approved
massive spending hikes without appropriating any new money
to pay a potential $3 billion obligation to New York City
schools. How will the state cover this obligation?
let me know what you think about these questions, or suggest
other issues you think we should be exploring, at email@example.com.
Let’s not let this rare opportunity to affect change
in New York’s tax policies pass us by.
Publisher, The CPA Journal
Executive Director, NYSSCPA