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NY Budget Ends Corporate Income Tax For Manufacturers
Author: Scarinci Hollenbeck, LLC
Date: April 28, 2014
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A number of states have been lowering their corporate tax rates in recent years in order to remain competitive for businesses and high-net-worth individuals. The most recent state to do so is New York, in which, for the first time since 1917, manufacturers will no longer pay the state’s corporate income tax, according to Newsday. Ending this tax may help the Empire State hold on to manufacturers, some of whom are leaving for states like Texas, Florida and the Carolinas, which boast lower tax rates.
Before the new budget, manufacturers had been paying 5.9 percent of their earnings in taxes, the news source explained. Other types of corporations, which had been paying a rate of 7.1 percent, will now see their tax liability lowered to 6.5 percent. The budget was approved at 12:01 a.m. April 1, the first day of the new fiscal year.
The new budget takes Gov. Andrew Cuomo’s Start-Up NY initiative, which had aimed to create tax-free zones in order to encourage innovation, and applies it throughout the state, according to Forbes. There has been a lot of talk about New York’s high tax burden, with Texas Gov. Rick Perry even going as far as to target New York businesses in an attempt to recruit them for his state, and it looks like this problem is being addressed by Albany.
From 1992 to 2010, the Empire State only experienced a continuous net gain of adjusted gross income from one state – Michigan, Forbes explained. In 2011, Michigan Gov. Snyder eliminated the Michigan Business Tax in favor of a flat corporate income tax rate of 6 percent. Many in New York are hoping that the new corporate tax break will help the state to remain competitive as other states continue to lower their tax burdens.
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