March 10, 2016
On Wednesday at the State Capital in Albany, State Senator Cathy Young (R, Olean), Chair of the State Senate Majority Finance Committee, unveiled the Senate’s tax relief package that includes a proposal to create a new 25 percent rate reduction for middle class taxpayers, new tax savings to help keep seniors in their communities, and tax relief for small businesses, farms and other job creators.
Senator Young said, “Making our state more affordable for middle income families and seniors through meaningful tax relief will enhance the quality of life for millions of New Yorkers. People need good paying jobs and a strong economy. Our small businesses and farms make up the majority of our state’s economy and our tax relief package will help them thrive and grow.”
Senator Tom O’Mara is a big supporter of the “25 by 25” plan, as it is called. “New York is still recognized as one of the highest-taxed states in America. It remains an unfair and unreasonable burden on individual middle class taxpayers, families, employers and workers,” said O’Mara. “We have to stay focused on the key priorities in New York State, and that means tax cuts.”
O’Mara said that the broad-based, $3.5-billion Senate Majority tax cut plan will be included in the Senate’s 2016-17 budget resolution, expected to be acted on next week, which spells out the Senate’s budget priorities for this year and sets the stage for final budget negotiations with Governor Cuomo and the state Assembly.
The senator says that the current rate 6.45 percent is set to expire in the 2018 tax year, with it reverting back to the previous 6.85 percent – resulting in an increase of $700 million on middle-income taxpayers. The Senate’s plan would extend the current tax cut and reduce the rate further, another 25 percent by 2025. “The plan would cut the middle class tax rate down to 5.14 percent when fully effective, saving the average middle class taxpayer $897, for a total of $3.5 billion statewide per year by 2025. Those taxpayers eligible for the savings would include: single filers with taxable incomes between $20,000 and $150,000; heads of households with taxable incomes between $30,000 and $225,000; and married joint filers with taxable incomes between $40,000 and $300,000.”
Senator Young says that the tax cut package also provides greater financial security for seniors. For the first time in 35 years, the plan would increase the amount taxable income for seniors who have private pension or retirement funds, allowing seniors to exempt up to $40,000 by 2019. According to the senator, the change would result in a savings of $361 in the first year for 377,000 seniors and a total savings of approximately $275 million annually when fully phased in.
Another part of the plan is the full elimination of the 18-a energy surcharge, which Senator Young described as “a costly tax gimmick which was originally implemented as a ‘temporary surcharge,’ but is not scheduled to be phased out until December 31, 2017.” The senator says that the Senate’s plan would eliminate it by the end of 2016 – resulting in a $600 million savings for ratepayers. “The energy tax surcharge shows up on everyone’s electric bills each month and will for the next two years if we don’t act,” said Senator Young. “The Senate previously fought to secure a phase-out of the assessment, saving ratepayers $455 million over five-years, and now we have the opportunity to do away with it for good.”
Officials say that the Senate’s tax cut proposal also includes a proposal to save small businesses $494 million annually. The Senate is also pushing to expedite the full phase-in of the estate tax reforms first enacted in 2014. According to senate officials, the plan will allow estates to have a tax exclusion amount equal to the federal exclusion amount when the estate has farm operations or a small business property that make up the majority of the estate. As proposed, the exclusion would be increased to $5.45 million beginning on April 1, 2016, savings about $70 million annually.
March 10, 2016