January 09, 2012

NYSUT and partners: Close corporate tax loopholes

Author: Betsy Sandberg
Source: NYSUT Communications
Caption: UFT President Michael Mulgrew, NYSUT Executive Vice President Andy Pallotta and NYS AFL-CIO President Mario Cilento at today's press conference. Photo by El-Wise Noisette.

NYSUT and its largest local union, the United Federation of Teachers, called on lawmakers to close corporate tax loopholes that are costing the state more than $1 billion a year.

"Accountability is a two-way street. It isn't just for schools," said NYSUT Executive Vice President Andrew Pallotta at a Monday morning press conference at the state's Legislative Office Building in Albany. "As New York grows its economy and creates jobs - a goal we all share - we need business to be accountable, too, and pay its fair share to help pay for the strong schools and colleges; safe bridges and roads; and other vital services that New Yorkers need."

At least a dozen speakers from different groups joined the coalition and issued a blueprint for corporate tax fairness. The group thanked Gov. Cuomo and the Legislature for taking steps toward fairness in the personal income tax structure last month, but called on lawmakers to continue on that path and fix corporate income taxes in the new year.

Members of the coalition noted the fiscal crisis has been tough on the state.

"Throughout this budget crisis, working men and women have been asked to bear the entire brunt of cost cutting through new pension tiers, higher health premiums and wage freezes," said Mario Cilento, president of the state AFL-CIO. "At the same time, many corporations fail to even pay the taxes they owe. We need to close corporate tax loopholes to infuse reoccurring revenue and end the vicious cycle of cuts to middle-class families."

"What we're asking for here are very reasonable solutions," said UFT President Michael Mulgrew. They include:

  • Require Real Estate Partnerships To Pay The Taxes They Owe. New York must undertake a new intensive review of the tax returns of investors in real estate partnerships to ensure compliance with tax laws. In an examination of just one year's tax returns (2005), IRS staff estimated that real estate investors underpaid $5 billion in taxes to the federal government and $385 million to New York state.
  • Reform New York's Corporate Alternate Minimum Tax (AMT). Beginning in 1994, New York's AMT rate was cut from 3.5% to 2.5% in 1999, to 1.5% in 2005 for non-manufacturers; and, most recently, .75% for manufacturers. (The manufacturers rate was recently changed in the tax reform package of December 2011). These changes should be repealed or the AMT should be replaced with a variation of the Alternative Minimum Assessment adopted by New Jersey in 2002. To ensure that such an assessment would not hurt small business, it should only be applied to businesses with annual gross profits of $5 million or more.

Those two proposals would raise close to $1 billion. Other proposals would raise funds, or simply would help shed more light on the picture of corporate profits. Those proposals include: tax nonresident hedge fund management fees; eliminate the carried interest exemption under New York City's unincorporated business tax; adopt rules that require taxes on multi-state corporations; and require public disclosure of corporate tax payments for publicly traded companies

"Just as Governor Cuomo and the Legislature took steps to make sure New Yorkers making $40,000 per year weren't paying the same rate as New Yorkers making $4 million per year, we've got to make sure that local small businesses aren't paying higher corporate tax rates than huge firms like Citigroup and General Electric," said Michael Kink of the Strong Economy for All Coalition. "Bodegas and car repair shops shouldn't pay more than hedge funds and big banks."

Ken Brynien, president of the state Public Employees Federation, said: "It is outrageous that hard-working PEF members pay the same or higher tax rates than New York companies that make up to $33 billion in profits a year. It's particularly insulting that middle-class families are paying the same tax rate as Rupert Murdoch's News Corporation."

Other coalition members include the state Labor-Religion Coalition, New Yorkers for Fiscal Fairness, the Fiscal Policy Institute, the Alliance for Quality Education, Citizen Action of New York, VOCAL-NY, the Human Services Council, the Coalition for the Homeless, New York Students Rising and Occupy Albany.

You can download the blueprint document (PDF) via Citizen Action.