Gov. Andrew Cuomo’s New York State Tax Reform and Fairness Commission recommended in a report today repealing the sales tax exemption on clothing and footwear less than $110; scrapping the gas cap; eliminating the estate tax for 73 percent of New Yorkers (middle class) who would be required to pay it; and other changes. The panel said the revenue generated by the reforms could go toward low-income tax relief and property-tax relief.
The report includes revenue-neutral policy options that would “modernize the current tax system with the goals of increasing its simplicity, fairness, economic competitiveness and affordability,” according to a news release from the governor’s office.
Repealing the clothing and footwear exemption would generate $800 million in additional state revenue, the report said.
“New York’s finances have greatly improved in recent years, but our long-term economic prosperity relies on reform of the tax code and tax relief,” H. Carl McCall, co-chairman of the commission, said in a statement.
Co-Chairman Peter J. Solomon said in a statement that the panel believes modernizing the state’s “archaic taxes” will result in further improvements to the business climate and encourage job creation.
Other changes the commission is calling for include:
— Adding additional services to the sales tax base to create greater uniformity between the state and local tax bases.
— Modernizing the sales tax to treat comparable products equally, regardless of the manner or medium in which they are sold. That includes currently non-taxed items such as eBooks, video-on-demand and music-streaming services. The state forgoes $35 million by not taxing those products.
— Updating and simplifying the state’s corporate and bank franchise taxes, and evaluate business tax credits annually to ascertain their effectiveness.
— Eliminating nuisance taxes, such as a tax on limited categories of income that is collected from just 200 taxpayers, generating $200,000 a year.
Under the gas cap, only the first $2 per gallon is taxed.
The governor has a separate tax panel — the New York State Tax Relief Commission — that is charged with identifying how to reduce property and business taxes. Its recommendations will be included in the governor’s 2014 State of the State message. That commission is co-chaired by McCall and former Gov. George Pataki.