Business sector gives nod to Cuomo tax plan

Gov. Andrew Cuomo outlined plans for 2016, as Long Island Association president Kevin Law, left, Nassau County Executive Ed Mangano, center, and Suffolk County Executive Steve Bellone listened.

John C. O’Connell/Herald

Gov. Andrew Cuomo is moving to reduce taxes for small business owners, and local businessmen and tax experts say they approve of the effort.

Cuomo’s plan, which he announced last week, is a two-pronged approach to lowering taxes for small businesses that pay corporate taxes as well as those that pay personal income tax. According to the governor’s office, about 1,091,000 small businesses statewide will benefit from the proposal.

For small businesses that file under the corporate tax code, the governor wants to reduce the net income tax rate from the current 6.5 percent to 4 percent beginning in 2017. A small business is defined as one with fewer than 100 employees that has a net income of $390,000 or less. The lower tax rates, which would vary, with 4 percent as the minimum, would be available to businesses whose net income is below $290,000, the governor’s office said in a news release.

The precise size of the cuts would depend on companies’ income, said Anthony Basile, a Hofstra University professor who specializes in business and taxes. “I think that would be a good thing,” he said of the proposal in general. “It’s very vague. He did not talk about a straight reduction.”

“Anything that can be done to reduce taxes on small business will be a positive,” said East Rockaway Chamber president Mike Hawksby. “For most owners and entrepeneurs it’s all the taxes and regulations that we face along the way day in and day out — and If the business is lucky enough to be profitable after all of that, then you get hit with a corporate tax on top!”

“One of the problems we have in New York is in competing,” Basile said. “Small businesses get hit with taxes not just at the state level, but at the federal and city level. So any reduction in taxes would be essential to help companies sustain and create jobs.”

The governor’s second proposal is geared to small businesses whose owners pay personal income tax. Currently, sole proprietorships and farms can subtract 5 percent of their income from tax calculations. Cuomo proposes raising that fraction to 15 percent, and expanding this type of tax break to cover more small businesses.