Brooklyn’s Progress Express
March 2009

A delegation of Brooklyn Chamber members heads up to Albany next week (Mar. 17 & 18), armed with the results of surveys of the Brooklyn business community and the challenges they face every day. One key element will be the results of a short issues survey you answered in the last issue of the Progress Express that asked Member’s opinions about the various taxes and programmatic changes proposed by Governor David A. Paterson to close the state’s yawning $15 billion dollar budget gap.

No Go on Transportation Taxes
With opposition to the payroll tax and removal of the gasoline tax cap, it is clear that Brooklyn businesses want to keep moving.

Seventy percent were opposed to a proposed business payroll tax, which would charge 33 cents on every $100 paid in wages, which would apply not only to private businesses and the self employed, but nonprofit organizations and government agencies in the 12-county region that the MTA serves. This proposal stemmed from the Ravitch Commission, a panel appointed by Governor Paterson to give their recommendations for closing the MTA’s own budget gap.

In addition, as one of the seven states that taxes gasoline, 60% were against eliminating the state’s gas tax cap, which is currently set at 4%.

Tax Battles
Some battles that took years to succeed in could be eliminated with the need for budget tightening, but consumer sentiment has been called decisive in the weak economy.

The state sales tax exemption on clothing under $110, which this Chamber helped lobby for and only came into effect in 2006, is set to be eliminated under the cuts. Survey respondents were opposed to this by a margin of only 54%; 40% supported the measure.

In response, New York City Mayor Michael Bloomberg weighed in, proposing to raise the city sales tax from the current 8.375% to 8.75%, something 57% of respondents were in opposition to, but 38% support.

The survey also found 63.5% of respondents supported a “Millionaire’s Tax,” proposed by Manhattan Senator Eric Schneiderman, which would increase the personal income tax on New York’s top earners in lieu of reinstating certain sales taxes on clothing and cutting other funding.

Under his proposal, income tax rates would increase for those earning more than $250,000 a year by 1.4% to 8.25%; for those earning $500,000 to 8.97%, and for those who earn $1 million to 10.3%.

Another contentious battle is playing out over the move to allow grocery stores to sell wine, which was nearly split between those who support the move and those who do not. Small and specialty wine and liquor stores are worried that this will siphon off their business and leave them devastated.

More Information Needed
Members were unsure about some of the proposed changes.

Governor Paterson’s proposal to increase Article 18A, a public utilities tax, by some 550%, garnered 61% opposition in the Brooklyn Chamber survey, but 31% of respondents didn’t have an opinion. The increase would raise more than $651 million in revenue, the vast majority of which would be placed in the state’s general fund to cover operating expenses of state agencies. Historically state agency operations were financed through direct taxes.

The plan to revamp Empire Zones, a tax incentive program designed to stimulate economic growth, would require participants to produce $20 for every $1 invested by the state in order to remain in the program. Under this proposal, utilities, retail and real estate businesses would be excluded from future participation. Members were similarly split on those changes, 40% opposing, 21% supportive and 31% who didn’t know.

‘Fat Tax’ Now a Moot Point
On Wednesday news broke that Governor Paterson would not be pressing forward with a host of “fun taxes,” including the tax on sugary sodas, which 60% of survey respondents actually supported, but found little support in public polls.

The attention now turns to the group of other controversial taxes and plans. The Brooklyn Chamber plans to bring these and other Member concerns to the forefront during its legislative meetings next week.