May 2006 Tax Relief
From the NYS Assembly • Sheldon Silver, Speaker
Herman D. Farrell Jr., Chair, Ways & Means Committee

Bipartisan budget provides real tax
relief for real New Yorkers

The Legislature approved a state budget that cuts taxes $1.6 billion this year and $2.5 billion next year, and rejects nearly $1 billion in tax increases the governor wanted to impose. As the result of bipartisan overrides of the governor’s budget vetoes, the Legislature ensured a spending plan that returns surplus tax dollars back to the families who paid them.

The budget targets tax relief for those who need it most, namely hard-working families, homeowners, seniors, and job-creating businesses. The budget provides real tax relief to real New Yorkers.

“With all the tax cuts the governor has proposed in his 2006 Executive Budget, it is a wonder that he failed to eliminate the tax that affects the average New Yorker and local business most, the state sales tax on clothing purchases.”

–David Weprin, Chairman, New York City Council Finance Committee

Relief from high property taxes

Local taxpayers need immediate relief from the burden of high property taxes and soaring housing costs. According to a recent state comptroller report, New York residents are paying the highest property taxes in the country, increasing at triple the rate of infl ation over the last fi ve years. In fact, property taxes have climbed by an average of 60 percent over the last decade.

The Legislature’s budget provides $756 million in property tax rebates to homeowners across the state. The budget also provides a cost of living adjustment to Enhanced STAR, which will save eligible seniors an additional $72 million.

“(The sales tax reduction is) terrific. I think it’s a good thing.”

– Barry Richman, Owner of Pearl Grant Richman’s, Guilderland, NY

Rejecting the governor’s sales taxes on clothing

The Legislature rejected the governor’s increase of the state sales tax on clothing and footwear items priced under $110. The budget permanently eliminated the regressive 4 percent state sales tax on clothing – saving shoppers approximately $600 million a year. Removing the sales tax will benefit New York by keeping more money in the pockets of working families. It will also help small retail businesses compete with those in neighboring states – which have already exempted clothing purchases from state sales taxes.

The Empire State Child Tax Credit

The Legislature’s budget contains $600 million in tax relief for New York families through a new child tax credit. The child tax credit is a maximum benefit of $330 for children between ages 4 and 17. This tax credit is superior to the governor’s shortsighted “education tax credit” – which was really just a school voucher, limited to educational expenses in only a small number of school districts.

“The tax credit the governor vetoed could be used by parents for tuition or new school clothes or even to help keep their children warm and well-fed.”

–Alan Lubin, Executive Vice President, New York State United Teachers

The child tax credit is a more inclusive tax break for families with children, allowing families to apply their automatic tax savings to not only educational expenses, but any of the costs that come with raising children – like food, clothing and child care.

Reducing income taxes

The Legislature also reduced the marriage penalty tax, which will save married couples $41 million annually when fully phased in.

The New York City STAR personal income tax credit saves 3.1 million city residents $252 million annually, with an average credit of $78. The budget raises the credit amounts to $115 for single filers and $230 for joint filers. The average credit will be $145, bringing total STAR savings for New York City residents to $462 million annually.

“The Legislature did the right thing, working for months in public to provide all New York parents with meaningful tax relief and at the same time give school districts the state aid they desperately need. Now a cranky, absentee administration has finally shown up, just in time to wreck months of negotiations and progress . . . (Pataki’s) hostility toward public education and higher education is, in a word, cruel.”

–Richard C. Iannuzzi, President, New York State United Teachers

Cutting business taxes

“We need the permanent elimination statewide of sales tax on clothing and footwear under $110. It’s good for retailers and good for consumers.”

–Kenneth Adams, President, Brooklyn Chamber of Commerce

To help businesses grow and create jobs, the budget:

  • Eliminates the S-Corporation Rate Differential, saving businesses $40 million

  • Increases the Vendor Credit for sales taxes, eventually saving small business $54 million

  • Enacts special Empire Zone Credits worth $50 million when phased in

  • Expands the Film Tax Credit, saving $60 million and extends it to the production of commercials, which will eventually save an additional $7 million

Other tax relief highlights

The budget includes:

  • An income tax credit for volunteer firefighters, which will save them $25 million when fully phased in

  • A tax deduction for New York State National Guard members called to service in New York by the federal government – saving them $1 million

“We’re excited about the potential opportunity. We see it as a win for those who will be shopping here in Rensselaer County. We see it as a win for our retailers who will be able to attract additional shoppers here.”

–Kathleen Jimino, Rensselaer County Executive

Governor must not stand in the way of tax relief

Sadly, however, the governor has threatened to tie up some of this tax relief in the courts, including the property tax rebates. His objections are based on legalistic technicalities – not democratic principles. We need to remind him that he is Governor George Pataki – not King George Pataki – and urge him to support tax relief.

Americans rejected the idea of taxation without representation over two centuries ago. This Legislature’s amendments to the governor’s budget represent the priorities of elected representatives from both sides of the aisle in the Assembly and Senate – representatives from across the state who are attuned to the values and needs of people in their communities.

Ignoring the votes of over two-thirds of the people’s representatives in both houses of the Legislature would amount to an extraordinary attempt to seize powers not given him by the state constitution. The governor needs to realize that working families’ budgets are being stretched too thin. He must stop standing in the way of a budget that helps families keep more of their hard-earned money.

“I gave a big cheer for (the sales tax reduction). I think it will keep people from migrating out of New York to shop. It’s a net gain for the state to do that because of the business it will generate.”

–Eugene H. Fleishman, Certifi ed Public Accountant, Poughkeepsie, NY

“Instead of people shopping in New Jersey or Connecticut, that 4 percent might keep people here.”

–Rafael Delgado, Small Business Owner, Fishkill, NY

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