WSJ: Pataki Said to Push Income Tax Cut

NYAPRS Note: NYAPRS is keeping a close eye on possible tax cuts in the budget this year that may put pressure on our expectations of a strong budget proposal for behavioral health initiatives. We will keep you notified about the movements of this proposal and others that may impact the BH budget, particularly is it could affect investment in recovery-based services prior to managed care expansion and housing allocations. Join us for Legislative Action Day on January 28 to protect cuts to much-needed BH funding.


Pataki Said to Push Income Tax Cut

Wall Street Journal; Erica Orden, 11/24/2013


Former New York Gov. George Pataki, co-chairman of a commission developing tax-cut recommendations for Gov. Andrew Cuomo, this week will propose to the commission a plan that would reduce the state's personal-income taxes, including those in the highest bracket, according to a person familiar with his thinking.

"He will push to bring the PIT down faster than the current plan," this person said, using the Albany acronym for personal-income taxes.

The person said the former governor would seek to make permanent some of the changes to middle-class taxes that were enacted in December 2011 and extended on a temporary basis this year.

Mr. Pataki's proposal also will address estate and business taxes, including the corporate tax on upstate manufacturers, according to this person.

John Cahill, an adviser to Mr. Pataki, said the former governor was considering a wide range of tax proposals and had yet to decide what recommendations to make. "If someone's saying that he's calling for an expedited PIT reduction, that would be something that he hasn't yet settled on," Mr. Cahill said.

The tax commission—led by Mr. Pataki, a Republican, and former state Comptroller Carl McCall, a Democrat—was expected to primarily focus on cutting property and business taxes. Mr. Cuomo has said he wants to introduce a package of state tax cuts as a "centerpiece" of his agenda for next year, and is widely expected to use the recommendations of the Pataki-McCall commission to develop his proposal.

A spokesman for Mr. Cuomo referred to remarks the governor made when establishing the commission, at which time he said he had asked the group to focus first on property taxes because they are the highest source of state-tax revenue.

In an interview, Mr. McCall said the commission "is looking at a variety of things," but my position is that we should focus on the mandate we received from the governor, which is to focus on the property tax and other certain possible corporate tax reductions."

Any push for personal income-tax cuts adds another layer to what should be a contentious debate over taxes in 2014 in Albany.

Indeed, as New York state lawmakers gear up for the next legislative session, which begins in January, all taxes, it seems, are on the table. Among the ideas already floated: Eliminate sales taxes on dental floss and deodorant; impose a tax on iTunes and Netflix purchases; and reduce the tax credit for film and TV productions.

In early October, Mr. Cuomo said he would develop a plan to cut taxes, and established his second tax commission. Since then, rank-and-file lawmakers, legislative leaders, the governor and the governor's tax-commission appointees have variously proposed, supported and denounced virtually every tax on the books. And there is more to come.

Next week, the tax commission led by Messrs. Pataki and McCall is due to make recommendations, roughly two weeks after the those of another Cuomo-appointed tax commission, the former aimed at simplifying the tax code. Among other ideas, the first commission recommended repealing the state's sales tax on clothing and footwear under $110 and taxing the sale of digital products, such as music and ebooks.

Senate Republicans have introduced their own suggestions, including making all retirement income tax-free and making the property-tax cap permanent and accelerating reductions in a utility tax surcharge. Senate Majority Coalition Co-leader Dean Skelos, a Long Island Republican, has said his conference will push hard for tax cuts.

And last week Assembly Minority Leader Brian Kolb, an upstate Republican, introduced his own set of proposals, calling for the repeal of the utility tax surcharge; creating a sales-tax-free week for education-related purchases; and eliminating sales tax on gasoline, car seats, bike helmets and hygiene products.

All of those tax-cut proposals come as New York City Mayor-elect Bill de Blasio is advocating a plan to fund universal prekindergarten by raising the city income-tax rate on residents making more than $500,000 to 4.41% from 3.88% for five years. Mr. Cuomo has said he could implement a pre-K program without raising taxes.

Any tax plan will need approval in the Democratic-controlled Assembly and the support of a breakaway faction of Democrats who share power in the Senate.

Senate Majority Coalition Co-leader Jeffrey D. Klein, a Bronx Democrat who has expressed support for Mr. de Blasio's plan, said he welcomed Mr. Pataki's proposals to make permanent middle-class tax cuts as well as the mayor-elect's plan.

Assembly Speaker Sheldon Silver said through a spokesman that his conference "will work closely with the governor and Mayor de Blasio to enact a budget that will ensure vital services for those that need them most while helping to grow New York's middle class."