By KENNETH POKALSKY //
As the political debate continues regarding the federal budget and sweeping “build back better” legislation, it is encouraging to see Democrats in the U.S. Congress are recognizing the adverse impact of proposed hikes in business taxes – and appear to have taken them off the table.
As New York’s largest statewide business advocate, the Business Council of New York State represents nearly 2,400 member companies of all sizes, in all sectors and in all regions of the state. In this role, we hear regularly from our members on their ongoing economic challenges. Adding a significant corporate tax-rate increase would only have compounded these problems.
The truth is, increased business taxes will harm New York State’s long-term economic wellbeing and inhibit the state’s ongoing recovery, which is already lagging behind national trends.
As we continue to recover from the COVID pandemic and its economic slowdown, we encourage our congressional delegation to continue holding the line against any proposals that increase the cost of doing business in the Empire State.
While the goal of improving our national infrastructure has broad support, the Biden Administration has proposed a number of ideas during this process to raise revenue at the expense of the business community.
Kenneth Pokalsky: Tax facts.
Concepts such as a 15 percent minimum tax on the “book” profits of large corporations will deter capital investment; imposing a surcharge on corporate stock buybacks will punish a wide range of shareholders. Other proposals to impose additional taxes on foreign earnings ignore that the United States already imposes the “global intangible low-taxed income” tax, or GILTI, adopted as part of the 2017 Tax Cut and Jobs Act.
It is essential that Congress rejects any changes to GILTI before other nations implement an agreed-to minimum tax. And it’s essential that the United States should not adopt a minimum tax rate higher than rates adopted by other key nations.
Corporate tax increases will have broad, adverse impacts. Corporate profits are really shareholder earnings, and in addition to corporate income taxes they are already taxed a second time – at the federal, state and New York City level – under the personal income tax, once those profits are paid as dividends to individual taxpayers.
Cutting into corporate profits will diminish dividends to a wide range of shareholders, including individuals and – given the large and rising share of institution-owned equities – pension funds and other retirement-savings programs.
Moreover, by impacting American corporations, these tax increases would hurt employees and consumers by negatively affecting investments, hiring and prices.
Congress has wisely refrained from raising the corporate tax rate. We encourage both political parties, now and in the future, to maintain this vigilance against these types of proposals, which would prevent New York from achieving full economic recovery.
Kenneth Pokalsky is vice president of the Business Council of New York State.
