Washington — Reforms to New York state’s corporate tax code made earlier this year could increase its competitiveness and improve its ranking in the State Business Tax Climate Index from 25th to fourth among the states, reflecting its reduced complexity, lowered rates, and broadened base, according to the nonpartisan Tax Foundation.
Foundation Vice-President of State Projects Joseph Henchman says: “New York is not a low-tax state, and its economic success is because of strengths that overcome a challenging tax environment. High taxes need not also be complex or poorly structured taxes, however, and removing these obstacles will encourage new jobs and economic activity.”
New York Governor Mario Cuomo worked with the independent tax policy research group to identify flaws in the code and obtain recommendations for improvement.
Reforms include eliminating the four tax bases on which the corporate tax is calculated to two over time; reducing the 7.1 percent tax rate to 6.5 percent; folding the bank tax system into the corporate tax system; exempting many small businesses from estate taxes by gradually connecting them to the higher federal threshold and eliminating the generation-skipping transfer tax; restructuring net operating losses by extending carrybacks to three years, removing the $10,000 cap and retaining the 20-year carryforward policy; and repealing the individual add-on minimum tax.