For the first time since 1987, New York is proposing substantial reforms to its corporate tax structure. In 1987 the impetus for change was external: The passage of major tax reform at the federal level in 1986 increased the tax base, which required attention at the state level. The impetus this time around is more internal: Tax policy experts in state government want to simplify and modernize New York’s confusing and antiquated corporate tax system, enhanced by a desire to remove or amend provisions in the scheme that are widely considered to impede economic growth in the Empire State. The reform proposals have been in the works for several years, but conditions were not considered ripe for a wholesale change. Now, the view is that reform is both a tax policy priority and an economic imperative.
For the most part, businesses and practitioners have welcomed the corporate tax proposals in Democratic Gov. Andrew Cuomo’s executive budget for fiscal 2014-2015, which range from repeal of the bank tax to new apportionment rules. The corporate tax reform spans more than 320 pages of the revenue budget bill (S 6359, A 8559), which the governor submitted to the New York State Legislature on January 21 for consideration. Many of the provisions emerged from the reports of the two commissions put together by Cuomo last year: the New York State Tax Reform and Fairness Commission and the New York State Tax Relief Commission. (That’s how we roll in New York— relief and reform. Why form one commission when two can be just as fun?)
Originally Published in State Tax Notes - March 3, 2014.
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