January 12, 2015
Revenue-neutral reform will streamline City and State taxes by merging bank tax into new corporate tax—eliminating burdensome administration and improving compliance, while broadening the city's tax base
NEW YORK—Mayor Bill de Blasio proposed today a major reform of New York City’s corporate tax structure, modernizing an outdated system, providing vital tax relief to the city’s small businesses and local manufacturers, and streamlining City and State corporate tax codes.
The revenue-neutral reforms will be retroactive to January 1, 2015.
Certain New York City corporate tax provisions have not been reformed since the 1940s and reflect an outdated financial regulatory structure. The City reforms announced today recognize the realities of the modern marketplace and treat firms consistently.
By conforming the City’s corporate tax system with that of the State, the de Blasio administration’s reforms will ensure that firms will not need to maintain separate records for State and City tax purposes, and—most importantly—create the consistency in computation of taxes that is critical to facilitating joint audits and preventing major administrative burdens for both taxpayers and the city. Moreover, these reforms will protect and support the expansion of the city’s tax base.
“These are common sense reforms that will modernize and streamline a corporate tax code that hasn’t seen real changes since the 1940s—serving taxpayers, businesses, and the City alike,” said Mayor Bill de Blasio. “By targeting relief to local small businesses and manufacturers, this will keep jobs here and expand economic opportunity. Together with a broadened tax base and the elimination of burdensome administration, this will mean a simpler, fairer system for all.”
The de Blasio administration’s corporate tax reform will be revenue-neutral on an aggregate basis and will do the following:
“By conforming important parts of the City’s business tax system with State tax law, the de Blasio administration’s reforms ensure that corporations will not need to maintain separate records for State and City tax purposes and create the consistency of taxes that is critical to preventing major administrative burdens for both taxpayers and the City,” said Department of Finance Commissioner Jacques Jiha.
“This long-overdue reform represents another initiative that moves the city forward, while protecting our long-term fiscal health,” said Budget Director Dean Fuleihan. “By creating consistency and reducing administrative burdens—while helping small businesses and manufacturers and broadening the tax base—this is a win for both the City and its taxpayers.”
“Small businesses create the vibrant fabric of our neighborhoods, deliver essential goods and services, provide local jobs, and for many New Yorkers, offer a first chance at economic self-determination and a path to the middle class,” said Maria Torres-Springer, Commissioner of the NYC Department of Small Business Services. “The City is committed to making sure small businesses have the resources they need to start, operate, and thrive in New York City, and the administration’s tax system reforms will provide significant relief to small businesses in NYC and encourage economic growth across all five boroughs.”
”These reforms help meet the needs of small business in a 21st Century economy,” said NYCEDC President Kyle Kimball. “Eliminating administrative burdens and reducing tax rates for New York City small businesses and manufacturers will provide needed relief for businesses that have long been the backbone of our neighborhoods and our economy. These changes will give impacted manufacturers the necessary assistance and financial flexibility to continue to create well-paying jobs that often provide career pathways and opportunities for economic mobility.”
“This is an important modernization of the City’s tax system that recognizes how banks and corporations have changed over the past two decades. It has been done in a responsible, revenue neutral way. I welcome the lower rates for small business and manufacturing. I look forward to working with the administration to continue to improve NYC’s tax code to better support all businesses,” said Council Member Julissa Ferreras.
“Our city is living out its commitment to simplify the administrative burdens placed on small businesses so that they can focus on what they do best – giving residents and visitors the goods and services we need and providing the jobs we rely on. I applaud this streamlining of the tax system & look forward to advancing further small-business friendly policy changes.” said Council Member Cornegy.
“Mayor de Blasio’s decision to conform the City’s tax code to match State reforms promises to make the city more attractive for business investment and job creation, reinforcing New York’s status as the global center of commerce and finance. Under Governor Cuomo’s leadership, New York State updated and streamlined its business tax code. On behalf of the city’s largest private sector employers, we thank the Governor and the Mayor for undertaking these important reforms,” said Kathryn Wylde, President and CEO of the Partnership for New York City.
“New York City has crafted a thoughtful approach to corporate tax reform, updating its taxes to facilitate compliance and doing that in a way that both levels the playing field among large businesses and maintains revenue neutrality. The City aims to reduce taxes on small businesses and manufacturers, while making sure that large businesses pay a fair share,” said James Parrott, Deputy Director and Chief Economist at the Fiscal Policy Institute.
“We applaud the efforts of the City to modernize and streamline the tax code in New York City by making it consistent with the State’s tax treatment. This is a long-sought goal of the banking industry, and we look forward to reviewing the legislation when introduced,” said Michael P. Smith, President & CEO, New York Bankers Association.
“We commend Mayor de Blasio for supporting key tax reforms and applaud the City’s commitment to improving the business climate for many industries throughout the city and state. The Mayor’s proposal modernizes outdated rules to conform to a major retooling of federal laws governing financial institutions, providing the financial sector with updated rules to enhance business planning and retention. The new tax laws will allow the industry to remain competitive and strong in order to bring greater benefits and opportunities to New York,” said Kenneth E. Bentsen, Jr., president and CEO of the Securities Industry and Financial Markets Association (SIFMA).
“As a Brooklyn-based manufacturer, at times, it seems there is no end in sight when it comes to our soaring costs for materials, labor and insurance. We fully support and embrace the tax reform and are confident it will help us continue to grow our business,” said Rob Ferraroni, Owner of Ferra Designs, which is based in the Brooklyn Navy Yard.