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Two more strikes

As Gov. Andrew Cuomo prepares for his 2014 State of the State address, which he has promised will center on lowering taxes, this much is certain: He will have no shortage of ideas from which to choose.
 
The governor has established not one but two commissions to advise him on tax matters. Meanwhile, Senate Republicans have unveiled a tax reform plan, and so has a coalition of groups on the left side of the political spectrum.
 
Since assuming office, the governor has taken steps such as introducing a property tax cap and lowering personal income tax rates for most New Yorkers. But few would disagree that more needs to be done to lighten the tax burden on the state’s residents.
 
Yet tax reform should not begin and end with lower rates. How taxes are levied is important too.
 
That point was underscored in last week’s final report from the New York State Tax Reform and Fairness Commission, the first advisory group Mr. Cuomo created. Yes, New York’s taxes are too high, the commission concluded. But also the state’s tax code is too complex, making compliance "unduly burdensome," and it often is unfair.
 
On the state’s corporate taxes, the commission noted that the basic franchise tax structure is "badly outdated, unduly complex and vulnerable to aggressive tax avoidance techniques."
 
On the sales tax, the report states that its narrow base "in part reflects an attempt to reduce the regressivity of the tax." But exempting many necessities such as food, clothing and health related products "is a highly inefficient way to protect lower income households."
 
On business tax incentive credits, the commission observes: "Despite good intentions, these credits may not result in a good return on investment for the state."
 
And as for New York’s system of property tax administration, it "has been ranked among the lowest in the 50 states."
 
The commission’s proposals-five detailed reform packages, which by design are revenue-neutral-will be joined by recommendations from Mr. Cuomo’s second advisory group and others. Let’s hope the basic message-about the need for fairness and efficiency-does not get lost.

11/22/13 (c) 2013 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email [email protected]

 

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