New York Gov. Andrew Cuomo is making some big changes in the state as far as employment standards go, most recently announcing plans for a proposal to cut taxes for small businesses in his upcoming state budget.
As reported by Syracuse.com and Small Business Trends, Cuomo had just proposed raising the state’s minimum wage to $15 per hour. This particular initiative is aimed toward helping low-income families but it would cost employers a collective $15.7 billion extra each year in employee wages, causing many business groups — especially those behind small businesses — to oppose the wage hike.
Considering that small businesses cite “insufficient capital” as the second-most common reason for going out of business, even the slightest increase in wages can be a huge financial burden for employers.
To offset the costs of the minimum wage increase, Cuomo stated during an event in Rochester that he planned on proposing tax cuts for small businesses in his state budget plan, which he announced on Jan. 13. The proposal includes $298 million annually in tax relief initiatives for over one million small businesses across the state, including 65,600 businesses in Western New York and 55,000 businesses in the Finger Lakes region.
Small businesses organized as partnerships, S corporations, and LLCs would all qualify for the tax breaks if they employ fewer than 100 workers, have a total net income below $250,000, and derive that net income from a business entity with less than $1.5 million in New York gross receipts. These businesses would all receive tax deductions of 15%.
Additionally, small businesses that pay taxes as corporations, employ fewer than 100 workers, and have a net income below $390,000 would qualify to pay a 4% income tax rate beginning in 2017, which would be a slight decrease from the current 6.5% rate.
According to the Rochester Business Journal, Cuomo noted that the tax benefits would be benefiting businesses which provide 43% of all employment opportunities in New York State.
“We are going to make critical investments in infrastructure, cut taxes for small businesses, and invest in the regional approach to economic development that has made a difference across upstate,” Cuomo said. “Together, we are going to continue moving this state forward.”