Report: New York Can Afford Tax Reform
New York City's business tax rate dwarfs those of other cities and needs to be reviewed to make the city more competitive, according to a new report by the nonpartisan Citizens Budget Commission.
Business taxes in the city are more than double those in Westchester County and more than 70% higher than those in Los Angeles, the study found.
The average effective business tax rate in the city is 7.5%. It is 5.2% in Houston, 5.1% in Boston, and 5% in Newark and Miami.
The report noted that the discrepancy in tax rates between New York and other cities would be even greater had the analysis included several other taxes paid by city businesses, including the commercial rent tax, the real property transfer tax, and the mortgage recording tax. They were left out because not all businesses pay them, the report states.
The study says the city can afford a tax reduction, as it has a surplus of more than $4 billion. This is the third consecutive year the city has collected a surplus exceeding $3.5 billion.
"The city is doing tremendously well economically," a deputy research director at the Citizens Budget Commission, Elizabeth Lynam, said. "It can afford to make the kinds of investments it needs to make to stay competitive, and taxes should be in the forefront of that discussion."
The Bloomberg administration and City Council are in the midst of budget negotiations. Mayor Bloomberg has proposed cutting property taxes by 5% and extending a $400 property tax rebate for homeowners, but many council members are demanding deeper cuts. City Hall sources say Speaker Christine Quinn has told the mayor she needs to bring back a bigger tax cut than the 5% the mayor proposed.
A spokesman for Mr. Bloomberg said the mayor has included more than $1.2 billion in tax relief in this year's budget, including cuts targeted at small businesses and corporations.
The report proposes that city leaders convene a commission to explore tax policy, a plan that has won an endorsement from the business community.
"We certainly support a call for simplifying the state tax code" and looking "at what we can do to be competitive with other cities," the president and chief executive officer of the Partnership for New York City, Kathryn Wylde, said. "The only time you can talk about reform and reduction is when there is the kind of surplus we enjoy today."
