Senate Republicans unveiled on Wednesday a plan that would provide a broad-based 25 percent cut in the state’s tax rate, that once fully phased in would cost $3.5 billion in relief.
“We believe that people should have more money in their pockets and the governor should have less money from people in their pockets,” said Senate Majority Leader John Flanagan.
It’s unclear how the tax cut plan would be paid for; Republican lawmakers at a news conference in Albany said the economic activity generated by the rate reduction, along with limiting spending increases in the budget 2 percent would make up the difference.
“We want to make sure we’re doing everything we can to promote economic development,” Flanagan said. “We want to have economic opportunity for all working men and women in New York state.”
In addition to the tax cut, Senate Republicans are backing tax actions that would benefit elderly New Yorkers by providing the first increase in the exempt amount of private pensions and retirement income since 1981, totaling $275 million once fully phased in.
Sen. Hugh Farley, a Schenectady Republican, said the provision was designed to curtail the number of retirees leaving the state.
“These seniors are taking their pensions and fleeing to Florida and other states that do not tax it,” Farley said. “We want to keep them here and contribute to our community.”
Another component would increase tax exemptions for small businesses paying an income tax, with savings of $494 million once fully realized.
And Senate Republicans are calling for an accelerated phased out of the 18a utility surcharge, which the business community in the state has sought for the last several years.
Whether Republicans can keep any of these tax cut proposals intact for the final budget agreement remains to be seen.
The conference is still seeking an end to the gap elimination adjustment for school districts, which Cuomo’s budget only partially addresses.
The proposal, which is expected to be included in the Senate’s one-house budget resolution, comes as the state’s current tax rates are due to expire at the end of 2017.
Assembly Democrats earlier this year backed a plan that would provide for a tax increase on the wealthy while reducing rates for lower-income earners. Cuomo has expressed unease with addressing taxes in this year’s budget given he is already contending with a push to increases the state’s minimum wage to $15.
Both tax proposals come as state lawmakers and Gov. Andrew Cuomo hammer out a proposed $154 billion spending plan that is due to pass by March 31.