Private banking: Top 2022 year-end planning ideas for individuals

Tina Myers, Key Bank

This year, we have seen our economy learn not only to live with the COVID-19 pandemic but to reaccelerate, too. We have also experienced geopolitical risk with the war between Ukraine and Russia, investment market volatility, rising inflation and rising interest rates. We have seen much of President Joe Biden’s Build Back Better legislation dwindle to what was passed in the Inflation Reduction Act.

With this year’s midterm elections, the president’s tax agenda may be stopped in its tracks. A few other legislative proposals possibly could pass during a lame-duck session, namely retirement saving incentives and provisions that could affect charitable planning. But a few provisions in the Inflation Reduction Act will affect planning in future years as will the expiration of tax cuts at the end of 2025.

Market volatility and inflation seem to be top of mind for many clients. So, as we approach year-end, do not get caught up in the uncertainty. Make sure your planning is where it should be with these planning ideas to consider as we wrap up 2022.

Tax bracket management – Accelerate income, accelerate or defer deductions

For now, tax rates may stay the same until the end of 2025. If you expect to be in a higher tax bracket in the next few years, you could accelerate income so it is taxed at the lower rate, deferring deductible expenses until later years when they can be claimed to offset higher-taxed income. Roth conversions, harvesting gains and deferring loss harvesting, exercising stock options, accelerating bonuses or moving up the closing date of a sale are just a few strategies to consider.

Many more taxpayers use the standard deduction. To maximize itemized deductions in certain years, consider the tactic of bunching expenses into this year or next year to get around deduction restrictions imposed by the Tax Cuts and Jobs Act (TCJA). This applies to deductions such as charitable, state and local taxes (up to $10,000), mortgage interest and miscellaneous itemized deductions. If your tax rate is expected to be higher in the future, consider deferring itemized deductions.

Vincent Lecce, Key Bank

Gain/loss harvesting – Make the most of reduced capital gain tax rates

Capital gain planning is still important. Long-term capital gains are taxed at a rate of 0%, 15% or 20%. And the 3.8% surtax on net investment income may apply. If these preferential rates are eliminated after 2025, long-term capital gains could be subject to a higher rate, so you may consider capital gain harvesting – selling now and repurchasing with a higher basis so that future sales will have less capital gain taxed at higher rates. Capital losses cannot be carried back by individuals but can be carried forward indefinitely.

Taxpayers wanting to realize paper losses on stocks while retaining the same investment position can sell and buy shares in the same company or another company, just avoid the wash-sale rules which disallow the loss if substantially the same shares are acquired within the 61-day period beginning 30 days before and ending 30 days after the sale.

The future change in preferential rates also applies to qualified dividend income. This could affect your investment strategy of shifting investments out of holdings that generate income taxed at ordinary rates (e.g., bonds) and into dividend-paying stocks to achieve tax savings. Dividend paying stock may not be as advantageous. You may consider tax-exempt bonds for additional tax savings. If this future change is more likely to occur as a result of expiration of TCJA provisions, review your investment allocation and adjust accordingly.

Roth conversions

With the potential for future higher tax rates, many more individuals are considering a Roth conversion and paying the tax on the conversion now at the lower rates. As you get closer to year’s end, you can determine your 2022 marginal tax bracket and projected investment income with more certainty.

If you are trying to convert your traditional IRA to a Roth IRA to pay the conversion tax at a lower rate, start those conversations now. Roth conversions can also offset unused tax carryovers that may be wasted.

Traditional IRA to Roth IRA conversions can reduce future required minimum distributions (RMDs) and create a potential tax-free inheritance for children. Under present law, there are no required distributions by the participant from the Roth IRA in future years. There are, however, RMDs for the non-eligible designated beneficiaries of a Roth IRA, generally within 10 years of the original owner’s death. And according to the IRS, under the recently proposed SECURE Act regulations, Roth IRA owners are considered to have died before their required beginning date.

This means that there are no annual RMDs from inherited Roth IRAs for beneficiaries subject to the 10-year rule. An inherited Roth IRA offers complete flexibility within the 10-year period and avoids the complicated RMD rules. But you could still get 10 years of post-mortem tax-free growth before final distribution to the non-eligible designated beneficiary.

If your beneficiaries will have lower tax rates than you, then conversion may not be the right strategy. Higher earning taxpayers who cannot contribute directly to a Roth IRA may be able to contribute to a non-deductible IRA that might later be converted to a Roth IRA. Alternatively, for those unable to contribute to Roth IRA, you may be able to convert the after-tax amount to a Roth IRA or do an in-plan Roth conversion to a Roth 401(k) account. But you can no longer recharacterize Roth conversion contributions as a result of the TCJA.

Review your portfolio

Make sure your asset allocation is in line with your targets and that it matches your risk tolerance and return requirements. Having a financial plan helps determine what the required return is in order to meet your goals. Staying disciplined during times of volatility is key for the remainder of 2022. With the bond market this year providing little income, there is still some merit to holding bonds for stability and capital preservation. For some investors, new tools such as alternatives and real assets can be incorporated to hedge against inflation.

Review RMDs in light of the SECURE Act

The SECURE Act of 2019 basically eliminated the “stretch IRA,” which allowed IRA or defined contribution plan beneficiaries to draw down the remaining plan benefits over the beneficiary’s life expectancy. Inherited IRAs and inherited defined contribution plans must now be distributed within 10 years of the original owner’s death. And according to the recently proposed SECURE Act regulations, if an IRA owner died on or after their required beginning date, the account is also subject to annual RMDs for years one to nine of the 10-year period. There are ways to simulate a stretch IRA using lifetime income strategies such as naming a Charitable Remainder Trust (CRT) or a Charitable Gift Annuity (CGA) as beneficiary or using the RMD to purchase life insurance that will provide a tax-free benefit to heirs.

Markets will always be unpredictable, and the volatility experienced in 2022 has been no exception. Are you prepared for what is ahead? As year-end approaches, review your financial situation with your advisor now and make adjustments before time runs out.

Vince Lecce, CIMA® is Senior Vice President and Rochester Market Leader for Key Private Bank. He can be reached at (585) 238-4107 or [email protected] Tina A. Myers, CFP,® CPA/PFS, MTax, AEP,® is Director of Financial Planning for Key Private Bank. She can be reached at [email protected]

Any opinions, projections or recommendations contained herein are subject to change without notice and are not intended as individual investment advice. This material is presented for informational purposes only and should not be construed as individual tax or financial advice. KeyBank does not provide legal advice. KeyBank is Member FDIC. KeyCorp. © 2022.         CFMA #221117-1814031


Report: ESD fails to fully evaluate most of its economic development programs

Empire State Development spends nearly $2 billion annually in taxpayer money for loans, grants, tax credits and other incentives to companies and projects, but fails to properly evaluate most of its programs to determine if they actually are boosting the state’s economy, a new audit from the state’s comptroller found.

In a report released Monday, New York state Comptroller Thomas DiNapoli noted that ESD administers some 57 programs with more than 5,000 associated projects that state laws and regulations require the public authority to evaluate every two to four years. Almost without exception, the audit found that ESD does not monitor or evaluate its economic assistance programs to determine whether goals are met, identify program successes and failures or apply successful strategies to other programs.

That creates uncertainty about program effectiveness, according to the audit.

“Empire State Development has an important role in helping New York’s economy grow and create jobs, especially now as we work to recover from the COVID-19 pandemic. However, the authority has not fully evaluated which programs work and which don’t,” DiNapoli said in a statement. “ESD does not use the data it collects to assess the effectiveness of its programs and see if the billions of dollars spent are creating opportunities across the state. The agency must do a better job of analyzing whether these programs are achieving their goals and share this information with the public.”

ESD officials said they have reviewed data for their Excelsior Jobs Program and START-UP NY Program that showed positive results and led to some changes in those programs. However, when auditors asked for supporting documentation showing how data was analyzed, ESD was unable to provide it.

Auditors also found that while ESD has migrated, or plans to migrate, many of its programs to a central database (Dynamics), others remain tracked elsewhere, and only 37 of its 57 programs were fully tracked in the Dynamics system. Having its programs and all associated projects in a centralized project tracking system would allow for greater efficiencies in compiling and reporting on relevant data, auditors said.

The audit did find that ESD does evaluate the economic impact of the film industry and that its evaluation found that the industry spends significant dollars throughout the state that generated nearly $1 billion in tax collections. As a result, ESD recommended that the state Legislature reduce the film tax credit from 30 percent to 25 percent of eligible expenses to ensure the long-term viability of the program.

ESD also evaluates its business and tourism marketing efforts to measure the effectiveness of its marketing programs, the audit found. ESD used the results to optimize marketing plans on an ongoing basis.

But the audit, which covered the period from Jan. 1, 2016, through April 16, 2021, also found that “despite the fact that ESD collects relevant data, beyond these specific program evaluations, ESD management does not see the value of conducting similar types of analyses or evaluations of any other of its economic assistance programs.”

ESD officials said analyses and evaluations were performed but were unable to provide documentation of such evaluations, according to the audit. ESD officials said they use a multi-level process to evaluate programs and individual projects are evaluated and audited to determine if the project’s goals are met, including employment and private investment goals. Officials said ESD issues more than 50 quarterly and annual reports each year, which are posted on the organization’s website.

“However, while providing valuable program information, most of these reports do not clearly evaluate program effectiveness,” according to the audit.

In ESD’s response to the audit, the agency noted that it has since launched a Database of Economic Incentives, which provides three years’ worth of active projects that will continue to be added to and updated quarterly. The database tracks project status, compliance status, job creation commitments and actual jobs created, among other things.

ESD officials also responded to the audit’s assertion that the agency does not conduct enough evaluations of its economic assistance programs by stating that the assertion is incorrect.

“ESD regularly engages in both project-level and program performance evaluations and routinely reports the results to the public,” ESD officials responded, to which DiNapoli reiterated that ESD was unable to provide evidence of any other evaluations or assessments beyond those referenced in the audit.

DiNapoli went on to say that ESD’s contention that it conducts and documents program assessments does not align with comments from legislators during annual budget hearings.

“Specifically, during the 2021 Executive Budget joint legislative hearing on economic development, the Senate Finance Committee questioned ESD on whether or not it evaluates the use of taxpayer dollars that go into programs and the new economic activity and new job opportunities created for the state,” DiNapoli wrote in his response. “Furthermore, the Senate Finance Committee states, ‘I’m just not sure that if we take a hard look, we’re going to be so happy with the results. But the fact is if we don’t take a hard look, we’re not going to learn from the mistakes we’ve made either.’”

[email protected] / 585-653-4021
Follow Velvet Spicer on Twitter: @Velvet_Spicer

Upstate United suggests using federal funds to provide unemployment insurance relief to businesses

Upstate United, a nonpartisan pro-taxpayer organization, has published a fact sheet detailing what it says is a potential $9 billion tax increase for employers statewide.

Troubling Trends — New York’s $9 Billion Unemployment Insurance Crisis makes the case for the state government to use untapped federal funds to provide unemployment insurance relief to struggling businesses.

“The impending unemployment crisis will be a big problem for small businesses across the state. Hitting employers with $9 billion in UI-related costs right now would derail our economic recovery at a critical time,” said Justin Wilcox, executive director of Upstate United. “Providing UI relief with unused federal dollars will help employers keep their doors open and workers employed.”

At the height of the pandemic, nearly 2 million New Yorkers were unemployed. As a result, the state’s UI fund ran out of money and New York ultimately had to borrow $11.9 billion from the federal government to cover its UI payments, the organization noted. While some of that money has been repaid, New York still owes Washington $9 billion. The state’s UI fund — which currently is insolvent — must be replenished.

Upstate United points to a recent analysis from the Tax Foundation that found that New York has more than $11 billion in federal aid available through the American Rescue Plan Act. That analysis also found that, unlike the majority of states nationwide, New York has not spent any federal aid to address its UI shortfall.

“Over the last 20 months, elected officials encouraged their constituents to support local businesses. Now, we’re asking those same officials to give a lifeline to employers before they go under,” Wilcox said.

In a report issued last month, New York State Comptroller Thomas DiNapoli voiced concerns about the state’s UI issues. According to the report, from the fourth quarter of 2019 until the second quarter of 2020, regular UI benefits paid increased from $530 million to $6.5 billion — an increase of 1,124 percent. Total benefit payments, including federally funded enhanced benefit programs, were nearly $100 billion in New York from March 1, 2020, through Aug. 6, 2021.

“The surge in UI claims rapidly depleted the balance of the New York State Unemployment Insurance Trust Fund, requiring the State to borrow from the federal government to pay claims, with $9 billion in outstanding UI loans as of Sept. 2, 2021,” DiNapoli wrote in the report. “Over the coming years, the obligation to repay these federal advances and rebuild the Trust Fund balance to appropriate levels will present a daunting challenge that could potentially impede the State’s overall economic recovery and prevent New York businesses from growing to the full extent of their capacity.”

DiNapoli called for a collaborative approach to address the crisis, stating “Working together, New York State, participating employers and the federal government can develop solutions that restore the Trust Fund while allowing the ongoing economic recovery to continue.”

Upstate United’s fact sheet noted that unless New York takes swift action, the state’s borrowing will result in many employers paying a 254 percent UI tax increase in 2025.

“There is a solution to this crisis. New York can pay down its debt and fully fund its UI trust fund using unspent federal dollars from COVID-19 relief programs,” the group stated. “Failing to do so will stick overburdened businesses across New York with a $9 billion tax hike and stall our economic recovery.”

[email protected] / 585-653-4021
Follow Velvet Spicer on Twitter: @Velvet_Spicer

Morelle introduces legislation to help manufacturers

Congressman Joe Morelle on Friday introduced legislation to protect investments in America’s manufacturing sector. The Permanently Preserving America’s Investment in Manufacturing Act makes a technical change to the U.S. Tax Code allowing businesses to continue deducting interest expense.

“Across the nation, our manufacturing economy has experienced challenges due to the impacts of the COVID-19 crisis. Now is the time to uplift these businesses, which is why I’m taking action to prevent a tax hike that would further harm this critical industry,” Morelle (D-Irondequoit) said. “My legislation would permanently preserve the current tax formula, allowing for a greater investment in manufacturing firms across the country and strengthening the backbone of our economy.”

Typically, interest on business expenses is tax-deductible but has a cap. At the end of 2021, the formula for calculating the deduction will become more restrictive. Known as the Earnings Before Interest, Taxes, Depreciation and Amortization standard (EBITDA), depreciation and amortization will be removed from the calculation, limiting the ability to deduct interest expenses. The change would have a disproportionate impact on the manufacturing sector, Morelle contends, as manufacturing firms often are required to take out loans to finance large capital investments in their facilities and equipment.

“Preserving the deductibility of interest expense is critical to manufacturers’ ability to invest for the future,” said Chris Netram, vice president of tax and domestic economic policy for the National Association of Manufacturers. “The NAM applauds Reps. Morelle and Smith for working to maintain the EBITDA standard and prevent harmful new interest limitations from taking effect at year’s end. Protecting EBITDA means that the women and men who make things in America will have the financial flexibility to expand their facilities, finance equipment and machinery purchases, and continue leading the economic recovery.”

The legislation has not been assigned a number yet, but the wording mirrors that of a bill introduced by Sen. Roy Blunt (R-Missouri) on April 12 this year. Morelle’s bill was co-sponsored by Rep. Adrian Smith (R-Nebraska).

[email protected] / 585-653-4021
Follow Velvet Spicer on Twitter: @Velvet_Spicer

Property owners believe tax assessment needs to reflect COVID-19 impact

No one ever likes to see their tax assessment arrive in the mail, and in the weeks that follow the arrival, commercial property owners often end up using the court system in an attempt to lower their bill.

With the deadline of July 31 to file an appeal nearly here, courts will be asked to arbitrate many more cases this year, especially for property owners who say town assessors ignored the devastating impacts that COVID-19 had on their businesses.

A lawsuit is the last step in the appeal process if an assessment review board failed to provide satisfactory — or any — tax reduction back in May.


“We definitely filed substantially more cases for hotels and office buildings than if COVID had not been an issue,” said Robert Jacobson of the Jacobson Law Firm, perhaps Rochester’s most prominent firm focused solely on real estate matters.

The assessment value essentially comes down to one basic element, he said: “What would Joe Investor pay to buy it?”

Thus, the argument against current assessments is quite elementary, according to Rebecca Speno, a partner at Speno MacLeod, PLLC, in the Syracuse suburb of Baldwinsville. She previously worked in Rochester at Bond, Schoeneck & King and still represents clients in the Rochester area.

Owners are saying if their property was assessed at $1 million in 2020 but they were required to close or scale back operations due to the pandemic, how can it possibly be worth the same, or more, in 2021?

It can’t, according to Speno. She said comparable sales must play into the assessment equation.

“If you don’t have income, why should your assessment still be $1 million?” said Speno, who also provides counsel to several municipalities in the assessment fight.

Aggrieved property owners that are going to court span the spectrum of commercial real estate; from the Hampton Inn in Webster and Courtyard by Marriott in Penfield, to Seabreeze Amusement Park in Irondequoit and J.C. Penney in Henrietta.

While the tax bill often is a point of contention for property owners, fighting the assessor wasn’t top of mind for hoteliers a year ago during the pandemic.

“The first thing you worry about if you own a hotel isn’t your taxes, it’s ‘My hotel is empty, I’m losing a fortune every month,'” Jacobson said.

As hotel business begins to rebound — at least with the leisure travel segment — owners now are saying the assessment must align with reality.

“A year before, your hotel might have been worth $5 or $6 million,” Jacobson explained. “But you’ve been closed all year and you’re going to lose a $1 million this year. So maybe you take $1 million off the price.

“The next question is, ‘How long will COVID last?’ Investors today are going to say, ‘How is this hotel going to perform in the next five years or the next 10 years?'”

Present value, he said, is a reflection of what’s going to happen in the future. With a continued slow recovery for hotels projected for another two years, especially with the uncertainty concerning COVID variants, investors may want even more shaved off the price.

That may be especially true with the uncertainty surrounding business travel, which impacts the great majority of hotels.

“Maybe a hotel in the Finger Lakes would be an exception, or something located near a college, but most hotels have a big component of business,” Jacobson said.

While many in the business world believe more is accomplished and more trust is built during face-to-face meetings, video conferencing is very likely here to stay to some degree.

“I could fly to Singapore to have a meeting, and it will take a couple days to get there and I’ll be there for a day to conduct my business, and then it takes a couple days to get home,” Robert Jacobson said. “Or I could have a Teams or Zoom meeting with them, be done in 15 minutes and have breakfast with my son right in my office.”

The Jacobson firm knows very well the convenience video conferencing provides.

“In the past we’ve had to drive to Albany or Buffalo for a 15-minute conference,” said Aaron Jacobson, a partner in the firm. “This is way more convenient. It’s one of the silver linings with COVID.”

Along with hotels, the office sector could take a future hit, and Jacobson’s firm has filed more cases for office owners than a typical year. Long-term leases are more difficult to nail down and some tenants are reducing space requirements as they adopt permanent work-from-home arrangements.

The assessment process begins with the tax status as of March 1, based on a value from July 1 of the previous year. The assessor then files the tentative tax roll by May 1 and property owners have until the fourth Tuesday in May to go before the board of assessment review.

The final tax roll is filed on July 1, after which petitions of dispute must be filed with the court by July 31.

“It’s the shortest statute of limitations in any court proceeding in New York state,” Jacobson said.

Springtime assessment actually is based on numbers from July of the previous year. That’s why, if property owners tried to use the impact of COVID-19 as an argument for reduction last year, “most towns took the position that you don’t use COVID because COVID wasn’t even known on July 1, 2019,” Robert Jacobson said. “Well it definitely affected property as of March 1, 2021, and some more than others.”

The good news: Once a lawsuit is filed, Jacobson said 95 percent of cases are settled through mediation and conferences. When a compromise cannot be reached, it could take two or three years before the case works its way through the court system to a decision.

[email protected]/(585) 653-4020

Upstate United addresses New York’s taxes

Upstate United, a non-partisan, pro-taxpayer organization, is again pushing back against New York state’s tax burden.

In a fact sheet released last week ahead of the state’s budget agreement, Upstate United shows how New York compares with other states in various tax areas.

“As special interests keep calling on Albany to raise taxes, our organization is committed to fighting for much-needed tax relief. Overburdened taxpayers continue to flee New York, due in part to the state’s extraordinary tax burden,” said the organization’s Executive Director Justin Wilcox in a statement. “Returning to the days of massive tax hikes and bloated budgets isn’t progressive, it’s problematic.”

The organization noted that New York ranked 48th nationwide in the Tax Foundation’s 2021 Business Tax Climate Index, ahead of just California and New Jersey. Upstate United noted that as part of their budget proposals, the state’s Senate and Assembly proposed higher rates on certain business taxes.

Citing several reports from WalletHub, Upstate United’s fact sheet shows that New York has the highest overall tax burden and the third-highest annual state and local taxes on median household. The state ranks seven for taxpayer return on investment, which is the total taxes paid per capita versus overall government services rank, and ninth for its effective property tax rate.

“Thanks to the recent federal stimulus package and better-than-expected state tax collections, there are ample resources for this year’s budget,” Wilcox said. “Moving forward, we’ll need to grow our way out of this problem. Washington isn’t going to come to our rescue every year. The sooner we can reopen businesses, rebuild our economy and revive our communities, the better.”

[email protected] / 585-653-4021
Follow Velvet Spicer on Twitter: @Velvet_Spicer

Cuomo, lawmakers reach deal on $212 billion budget

Gov. Andrew Cuomo and state lawmakers reached a deal on the state’s budget this week.

The final, $212 billion budget includes a number of measures to aid industries and sectors that have been hardest hit by the pandemic. Additionally, the enacted budget closes the state’s deficit and invests in the ongoing response to the pandemic and recovery efforts.

Highlights of the budget include:
• A record $29.5 billion in aid to schools;
• $29 billion in public and private green economy investments;
• $2.4 billion for rent and homeowner relief;
• $2.4 billion for child care;
• $2.1 billion for excluded workers;
• 1 billion for small business recovery;
• A first-in-the-nation plan to make broadband internet affordable;
• Legalizing mobile sports betting; and
• Implementing comprehensive nursing home reforms.

“New York was ambushed early and hit hardest by COVID, devastating our economy and requiring urgent and unprecedented emergency spending to manage the pandemic,” Cuomo said in a statement Tuesday. “Thanks to the state’s strong fiscal management and relentless pursuit to secure the federal support that the pandemic demanded, we not only balanced our budget, we are also making historic investments to reimagine, rebuild and renew New York in the aftermath of the worst health and economic crisis in a century.

“This budget continues funding for the largest-in-the-nation $311 billion infrastructure plan, establishes a groundbreaking program to provide affordable internet for low-income families and enhances public safety through police reforms, all while continuing to provide relief to New Yorkers and small businesses as we recover from the pandemic,” Cuomo added. “I thank the legislative leaders — Senate Majority Leader Stewart-Cousins and Assembly Speaker Heastie — for their partnership in helping make this critical budget a reality and delivering results for the people of this state.”

The budget comprises New York’s $311 billion infrastructure plan, which includes the governor’s $211 billion 2020-24 plan and his $100 billion 2015-2019 plan. The evolving plan increased by $36 billion in the budget with the inclusion of new development plans in New York City, a $3 billion environmental bond act, transportation programs and additional supportive, affordable and public housing support, as well as incremental increases to existing capital programs.

The budget includes legislation requiring internet service providers to offer an affordable $15 per month high-speed internet plan to qualifying low-income households. The state also will require providers to advertise the plan to ensure programs reach underserved populations statewide. To further bridge the gap, New York has partnered with Schmidt Futures and the Ford Foundation to launch ConnectED NY, an emergency fund to provide roughly 50,000 students in economically disadvantaged school districts with free internet access through June 2022.

The enacted budget directs $2.3 billion in federal child care resources to expand the availability, quality and affordability of child care. Child care providers would receive $1.3 billion in stabilization grants to support expenses, as well as additional funds for cleaning and safety. Further investments would be made to increase capacity in child care “deserts” and help parents find the child care provider that’s right for them.

The budget creates a $2.4 billion Emergency Rental Assistance Program (ERAP) to ensure residents can make rent and remain stable in their homes. The program will support households in rental arrears that have experienced financial hardship, are at risk of homelessness or housing instability and that earn less than 80 percent of area median income.

The enacted budget includes comprehensive nursing home reform legislation to help ensure facilities are prioritizing patient care over profits, officials said. The reforms establish minimum thresholds for nursing home spending of 70 percent of revenues on direct resident care and 40 percent of revenues on resident-facing staffing, capping profits at five percent, and targeting unscrupulous related party transactions. Excess revenues recouped by the state will be deposited into the existing nursing home quality pool for further investments for nursing homes to meet high-quality standards.

The budget includes a $1 billion small business, arts, entertainment and restaurant relief package to help businesses and other organizations recover from the impacts of the pandemic:
• COVID-19 Pandemic Small Business Recovery Grant Program: Provides $800 million in grant funding for small businesses including for-profit arts and cultural institutions impacted by the COVID-19 pandemic.
• New York Restaurant Resiliency Grant Program: $25 million in grant funding to support restaurants that provide meals to distressed and under-represented communities.
• Arts and Cultural Organization Recovery Grant Program: $40 million to provide grants through the New York State Council on the Arts to eligible arts and cultural nonprofit organizations to assist in the recovery from the COVID-19 pandemic.
• Restaurant Return-To-Work Tax Credit: Provides up to $35 million in tax credits to support restaurants hard hit by the pandemic through 2021.
• Extend and Enhance the Musical and Theatrical Production Credit for four years: In order to support musical and theatrical productions that occur in the state but outside of New York City, the budget extends the credit for four years through 2025 and increases it by $4 million to $8 million.

The 2022 enacted budget continues to lower personal income tax rates for middle-class New Yorkers. In 2021, the fourth year of the multi-year tax cuts enacted in 2016, income tax rates have been lowered from 6.09 percent to 5.97 percent for taxpayers filing jointly in the $43,000-$161,550 income bracket, and from 6.41 percent to 6.33 percent in the $161,550-$323,200 income bracket. The cuts are expected to save 4.8 million New Yorkers more than $2.2 billion this year, officials said. When the cuts are fully phased in, middle-class taxpayers will have received an income tax rate cut of up to 20 percent, amounting to a projected $4.2 billion in annual savings for six million filers by 2025. As the new rates phase in, they will be the state’s lowest middle-class tax rates in more than 70 years.

The enacted budget includes new revenue resources that provide the revenues needed to make the investments that will support New York’s ongoing response to the COVID-19 pandemic and New York’s recovery from it, according to the governor’s office, including:
• The budget deploys the first $5.5 billion of the $12.6 billion provided for in the federal American Rescue Plan Act 2021. These funds are integrated throughout the budget in accordance with available federal guidelines.
• The budget includes appropriation authority for local governments to receive federal support. The package of $10.8 billion in federal aid for local will help support essential workers and government employees, assist the vaccination efforts, boost local economies and support the network of local government services that New Yorkers depend on.
• The budget implements a surcharge on high earners through tax year 2027 that sets a top rate of 10.9 percent for all filers earning more than $25 million. The surcharge raises $2.8 billion in FY 2022, rising to $3.3 billion in FY 2023.
• The budget implements a surcharge on corporate tax rate that increases the business income tax rate from 6.5 percent to 7.25 percent for three years through tax year 2023 for taxpayers with business income greater than $5 million. It also increases the capital base method of liability estimation to 0.1875 percent from the 0.025 percent rate in effect last year. The capital base method increase continues to exempt qualified manufacturers, qualified emerging technology companies, and cooperative housing corporations. These changes raise $750 million in FY 2022 and $1 billion in FY 2023.
• The FY 2022 enacted budget authorizes mobile sports wagering. Once fully phased in, legalization will provide more than $500 million in revenue for the state to help rebuild from COVID-19 and grow what could be the largest sports wagering market in the U.S. into a profitable industry long-term. Once fully phased in, the program will provide $5 million annually to youth sports and $6 million to combat problem gambling, doubling the resources currently available. The remainder of this new revenue will be dedicated to education.

“While this year’s state budget includes some positive measures, such as support for struggling small businesses, tax relief for middle-class residents and significant funding for local roads and bridges, the inclusion of massive tax hikes and costly mandates poses a serious risk,” said Justin Wilcox, executive director of Upstate United, a nonpartisan, pro-taxpayer education and advocacy coalition. “Imposing $4 billion in new taxes will ultimately hurt New York’s recovery efforts. This immense tax burden will drive more New Yorkers out of the state; joining the 1.4 million former residents who have fled to other states over the last decade. Embracing a massive tax-and-spend approach over a responsible pro-growth plan is the wrong choice at the wrong time.”

The budget provides $6.2 billion for the second year of a record $12.3 billion, two-year Department of Transportation capital plan that will facilitate the improvement of highways, bridges, rail, aviation infrastructure, non-MTA transit and DOT facilities, a 38 percent increase from the final two years of the last DOT capital plan.

“This year’s state budget includes an extraordinary investment in transportation infrastructure. With the unwavering efforts of our partners in the Senate and Assembly, and the support of Gov. Cuomo, local road and bridge programs will receive more than $1 billion in the coming fiscal year,” said Joe Wisinski, president of the New York State County Highway Superintendents Association. “This essential funding will help keep millions of motorists safe and create tens of thousands of jobs.”

Funding for the Consolidated Highway Improvement Program (CHIPS) and the Marchiselli program will increase by $100 million to $577.8 million and funding for Extreme Winter Recovery is $100 million. The budget also provides $100 million of new funding to localities responsible for State Touring Routes, increases highway aid through the PAVE NY program by $50 million to $150 million and maintains funding of local bridge projects through the BRIDGE NY program at $100 million. This represents an overall year-to-year increase of $285 million and brings funding for local highway and bridge projects to more than $1 billion.

“Due to the incredibly strong advocacy efforts of our partners and advocates, the overall NYSDOT capital program is the largest ever at $6.168 billion,” said Mike Elmendorf, president and CEO of Rebuild New York Now. “Within the NYSDOT capital program, state and local construction also hit a record level for the 2021-2022 budget at $4.8 billion. This significant increase in funding will allow for localities and municipalities across the state to repair decaying infrastructure and create more jobs to help our economy fully recover. New York families deserve this investment in their local communities.”

The budget provides more than $7.7 billion in state support for higher education in New York, an increase of $283 million, or 3.8 percent, from FY 2021. New York has increased funding for higher education by more than $1.7 billion, or 29 percent, since FY 2012. In addition, the enacted budget provides more than $1 billion in new capital funding to SUNY and CUNY.

“The pandemic-induced economic crisis has hit our most vulnerable students the hardest. Financial challenges, including food and housing insecurities, have disrupted their pursuit of a degree or certificate — and ultimately a rewarding, family-sustaining career in high-demand industries,” said Katherine Douglas, Monroe Community College interim president. “I’m grateful to Gov. Cuomo and our state legislators for their bold vision, leadership and support of our students. Federal and state support will eliminate hurdles to college access and completion, paving the way for more equitable, brighter futures for our students. It will also enable MCC to keep its tuition affordable. Together, we will help transform the lives of our students and the local community and revitalize our region’s economy.”

New York’s colleges and universities are expected to receive an estimated $5.4 billion in direct federal stimulus aid, including more than $3.4 billion for public colleges and close to $2 billion for private colleges. SUNY and CUNY have nearly $3 billion in remaining stimulus funds to spend over the next 2-3 years. A substantial portion of this funding will be used to provide financial aid grants to students with exceptional needs, such as students who receive Pell grants.

The FY 2022 enacted budget enacts a COVID-19 Recovery Workforce Initiative, which invests $50 million for training in high-growth industries, employer-driven training for low-income workers and funding for small businesses to re-train and hire furloughed, laid-off or new employees.

Since the beginning of the pandemic, the Department of Labor has paid out more than $75 billion in benefits to more than 4 million New Yorkers — more than 30 typical years’ worth of benefits. The budget supports reforms to the unemployment system, including upgrades to modernize technology, among other things.

The budget creates a $2.1 billion program to provide cash payments to workers who have suffered income loss due to COVID but who are ineligible for unemployment insurance or related federal benefits due to their immigration status or other factors.

“For the past few days, we have either been kept waiting on budget bills or working on them until the wee hours of the morning,” said Assemblyman Brian Manktelow, R-Lyons, in a statement Wednesday. “It seems the mindset for the Assembly Majority is that the bigger we grow the budget, the better New York will be. I feel the complete opposite, as I believe we must go to battle against the debt New York has stacked up in order for our state to get anywhere. We must speed up our debt payback. I view a successful budget as to not raise taxes but to reduce them at a rate of a percentage each year. The more money we can leave in the pockets of residents, the better shape our state will be in for future generations.”

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Unshackle Upstate provides tax burden fact sheet

Unshackle Upstate, a non-partisan pro-taxpayer organization, has released a new fact sheet that highlights what it calls the burdens imposed on New York’s taxpayers.

“Taxed Out – Assessing New York’s Massive Tax Burden” features state-specific tax rankings from the Tax Foundation, the nation’s leading independent tax policy research organization.

“For far too long, New York’s taxpayers have carried a burden that is simply too heavy,” said Brian Sampson, Unshackle Upstate chairman and president of Associated Builders and Contractors. “Each year, tens of thousands of families flee New York for states with better tax climates. This situation is unsustainable and unconscionable. Without meaningful tax relief, our communities and economy will continue to struggle.”

According to the fact sheet, New York ranks first in state and local individual income tax collections per capita and for state and local tax burden. The state ranks fourth for state and local property tax collections per capita and fifth for combined state and average local sales tax rate.

Unshackle Upstate noted that some 1.4 million people have left the state in recent years. From 2010 through 2018, New Yorkers have fled to Florida more than any other state, the group said. Florida is “one of the most taxpayer-friendly and pro-business states in the nation,” the fact sheet states.

Florida also is the top retirement state for individuals seeking its warm weather year-round, according to SmartAsset and WalletHub.

“When you look at where we rank on these key taxes, it’s easy to understand why more than 1 million New Yorkers have left the state over the last decade,” Sampson said. “Raising taxes, as many special interests and officials have called for, will only worsen New York’s economic and outmigration crises.”

In its fact sheet, Unshackle Upstate notes that the Tax Foundation’s State Business Tax Climate Index, which provides an annual analysis of key tax rankings for each state, has ranked New York 48th or lower every year for the last decade.

In September, Unshackle Upstate released its “Fast Forward – A Rapid Recovery Plan for the Upstate Economy,” which provides a pro-growth agenda that included several tax relief proposals designed to accelerate upstate’s economic recovery.

[email protected] / 585-653-4021
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Unshackle Upstate releases business climate survey results

Taxes and wages continue to besiege upstate businesses, a new survey from Unshackle Upstate Inc. shows.

The “2019 Upstate Business Climate Survey” highlights employers’ perspectives on the impact of the 2019 legislative session, as well as their viewpoints on issues that likely will come up in the coming year.

Michael Kracker
Michael Kracker

“Looking back at 2019 and seeing the road ahead in 2020, it’s clear that upstate employers are concerned about what’s happening in Albany,” Unshackle Upstate executive director Michael Kracker said in a statement Monday. “Taxes, mandates and other obstacles are hurting job growth and driving New Yorkers to other states for economic opportunity.”

Kracker said addressing those concerns and improving the upstate business climate are critical to the future success of our communities.

Unshackle Upstate surveyed 100 employers across upstate earlier this year and found that 90 percent had a negative opinion of the 2019 legislative session. Business leaders said the Climate Leadership and Community Protection Act would have the most negative impact on the upstate economy, while a permanent 2 percent property tax cap would have the most positive impact.

Some 91 percent of employers expect New York’s business climate to worsen in the coming year, while 2 percent said it will improve. Taxes are expected to have the most impact on the state’s business climate, 88 percent of respondents said, followed by employer mandates. More than half of business leaders said state spending will have the most impact.

Nine out of 10 employers said they know someone who left New York to find better economic opportunities.

“Having lost more than a million residents in the last decade, Albany needs to wake up,” Kracker said. “Unfortunately, leaders have already signaled that the worst is yet to come.”

The top three issues that employers strongly support in 2020 are infrastructure investment, mandate relief and regulatory relief, while the top three issues strongly opposed by business leaders are an expansion of the prevailing wage, single-payer and minimum wage increase.

“New York’s harsh business climate drives up costs for existing businesses and makes it more difficult to attract new investment,” Kracker continued. “We need Gov. Cuomo and legislative leaders to recognize this reality and advance policies that will get the upstate economy moving in the right direction.”

Unshackle Upstate is a pro-taxpayer advocacy coalition of business and trade organizations from across Upstate New York.

[email protected] / 585-653-4021
Follow Velvet Spicer on Twitter: @Velvet_Spicer

Early tax payment available to avoid 2018 tax hikes

Monroe County tax bills for 2018 will be made available before the end of 2017 so that residents can take advantage of more favorable tax laws that will expire as a result of the Trump administration’s tax reform plan.

Monroe County Executive Cheryl Dinolfo announced Friday, Dec. 22, that the bill will be prepared and posted online by 9 a.m. on Dec. 29 so that taxpayers can pay them, if they wish, on the last business day of the year.

“We have received many questions from residents about the possibility of paying their property taxes early as a result of recently-passed federal tax reform legislation,” Dinolfo said. She recommended residents consult a tax adviser before deciding whether to pay early. Those who pay their taxes as part of a mortgage escrow plan should contact their lender to see whether early payment is possible.

City of Rochester residents can pay the bills in person at the County Treasurer’s Office, 39 W. Main St., or online. The office will be open from 9 a.m. to 5 p.m. that day.  Residents of Monroe County outside of the city can contact their town offices about where and when taxes can be paid.

To pay online, taxpayers should visit and select “View taxes online.”  A fee of 3 percent is charged for paying with a credit card.

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