Legislative

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SBC's Legislative Agenda

Small Business Taxes

New York’s tax burden is the number-one drawback to site selectors and business leaders expanding or relocating here. The high cost of doing business in New York (i.e. taxes, labor costs and insurance rates) does not allow our state to compete; as a result, small businesses see this first and suffer the most. The Executive Budget for 2007 includes a number of proposals that would increase taxes for hundreds, if not thousands of New York employers. Four points of concern are:

Combined reporting. Under the proposed budget, the income of companies in other states could be taxed in New York if subsidiary, related or parent corporations are doing business in the state. The Budget Division estimates that proposal will cost taxpayers $215 million annually.
Changes to taxes on banks and real-estate investment trusts ($181 million). Bank-related changes include an increase in the tax on employee wages, so banks’ tax liability would increase when they increase employment.
Elimination of a deduction for production costs incurred by manufacturers, research, software, film and production companies ($35 million).
An increase in the tax on health-insurance policies ($75 million).

The Senate Republican Majority has introduced their own plan that, over three years, would provide over $1.3 billion in tax relief to small businesses that would overall decrease the cost of doing business and enable New York to compete with other states. The Senate’s tax-cut proposals include the following:

Eliminate corporate income and franchise tax for manufacturers regardless of size ($550 M)
Reduce Corporate Franchise Tax rates from 7.5 to 6.85 percent ($150 M)
STAR residential property tax relief checks to small businesses paying school taxes with 20 or less employees ($150 M)
Tax relief through reforms of the corporate franchise tax ($20 M)
Refundable tax credits for the rising costs of energy to help 386,000 small businesses that employ 20 or less ($350 M)
Cut State red tape and bureaucracy

* parentheses indicate total projected savings

The Small Business Council of Rochester supports the tax-cut proposals outlined in the Senate’s Small Business Assistance Package. New York suffers form the nation’s most severe tax burden and fourth-highest corporate taxes per capita. This plan will help ease this fiscal strain and cultivate jobs and businesses in New York State.

Workers Compensation

As many of you by now know, Governor Spitzer signed into law a Workers’ Compensation reform bill that many claim will save employers 10% on their premiums annually. While the new law has some good points and obvious savings, the Small Business Council has numerous areas of concern.

Good things:

Cap on PPD’s that range from 225 weeks to 500 weeks
Elimination of the second injury fund which will reduce assessments
Injured workers will get faster care and an increase in the weekly benefit
Pharmaceutical fee schedule

Items of Concern:

Payments in 2010 will be based on 2/3rds of the average weekly wage of all NY residents which is currently $1200 (NYSDOL)
Payments will be indexed after 2010 (this takes away some incentive for certain groups to return to the table for more negotiations)
Mandatory offering for Section 32 settlements

What still needs to be addressed:

The cap only begins once an injured worker is classified with a PPD. That could still take 1-3 years to get established. Meanwhile, payments continue
Medical Committee that will be established needs to remove loopholes and establish clear and consistent guidelines for diagnosis and classification. We need AMA and ACOEM guidelines
What is the formula that will be used to establish “loss of wage-earning capacity”
The system will still allow trial attorneys too much control and leverage and that needs to be closed

The Small Business Council of Rochester supports the reform efforts of our elected officials but remains vigilant on this issue. Much of the savings promised by this new law will come from the establishment of AMA and ACOEM guidelines not yet written into law. We must continue to push for those established medical guidelines as well as programs that expedite a quick recovery and return to the workplace for injured employees.

General Liability 240/241

The insurance crisis has come about because courts, pressed by trial lawyers and some building trades, have interpreted section 240 of the labor law to make the general contractor, homebuilder, certain building owners, and now lessees absolutely liable for employee injury. If a worker is injured on the job the builder is held responsible even if the worker did something significant that contributed to his or her own injury.

Supporters of Labor Law 240/241 say that the standard makes the workplace safer. Illinois, the only other state to have a labor law similar to New York, completely repealed their version, the Structural Work Act, in 1995. As you can see below, the number of people employed by the construction industry increased 25 percent while injuries resulting in death, as a percentage of the workforce, decreased by 70 percent.

Pre-repeal Post-repeal

Year

Construction Employment

Fall Fatalities per 100,000 workers

1996

224,000

7.1

1997

230,800

6.9

1998

239,900

7.1

1999

253,400

5.9

2000

248,900

5.6

2001

277,300

5.7

2002

277,600

5.7

2003

274,000

7.0

2004

269,000

5.2

2005

270,000

3.7

Year

Construction Employment

Fall Fatalities per

100,000 workers

1992

196,000

10.2

1993

204,000

6.0

1994

211,000

9.5

1995

216,700

12.5

According to Turner Casualty & Surety, the cost of general liability coverage required for construction in New York State is approximately 3.3% of the project cost. That makes us 1% higher than the rest of the country, all due to Labor Law 240/241. This has a dramatic effect on taxpayers and homeowners. Consider:

New Homes: if you purchase a $150,000 home, you will pay and extra $990. Factor that out over an average 30-year mortgage with an interest rate of 6% and you have paid over $9,000 more for that house because of Labor Law 240/241
School Districts: capital project expenditures for five area school districts is $61.36 million. That equates to nearly $405,000 dollars needed for additional insurance coverage that is not going to new books or technology upgrades because of Labor Law 240/241
Construction Market: Contractors that remain and can buy coverage are doing so at anywhere from two to six times the rates in other states. New York State has a $20 billion annual construction market; that's $264 million in excess cost to taxpayers, homeowners and construction consumers annually because of Labor Law 240/241.

The Small Business Council of Rochester has supported A.2058, formerly sponsored by Senator Volker and Assemblyman Morelle which would create a comparative-negligence standard that would bring fairness to the issue, lower the cost of doing business, as well as create more, safer, job opportunities for workers.

Health Insurance

Small business owners believe that their ability to attract and retain talented workers is contingent upon benefits as much as it is on wages. However, small businesses operate on thin margins and the cost of healthcare continues to rise annually. Unfunded mandates from the state and increases in Medicaid expenses are forcing many employers to cut back their contribution level toward the premium or eliminate offering health insurance.

Healthcare coverage is already expensive and New York’s uninsured population is rapidly rising. New York State should cease adding health insurance mandates that continue to drive up costs. New mandates force small and medium size businesses to:

· Not offer healthcare insurance

· Scale back coverage to offset increases

· Absorb the difference which makes them less competitive with out-of-state companies

· Move the increase to employees

The Small Business Council of Rochester supports all initiatives that aim to provide tax credits for small businesses providing health insurance to their employees. The tax breaks will help small businesses continue to offer insurance and will help reduce the number of uninsured people in New York.

The Small Business Council of Rochester strongly opposes any legislation that proposes mandatory health care insurance that is to be provided by employers to their employees.

The Small Business Council supports legislation that allows for easy access as well as providing incentives to small businesses that provide health insurance to their employees such as the bills listed below:

S.164 (Alesi) / A.2359 (Schimminger) - Provides a tax credit to small businesses for the expense of providing health benefits for employees; allows modification on federal adjusted gross income for premiums paid by self-employed persons for small business health insurance policies.
A.2524 (Morelle) - Relates to establishment of “freedom health insurance plans”; provides a tax credit for certain health insurance plans purchased by small employers and certain individuals; provides additional payments to HMO`s from the direct payment stop loss fund; amends certain enrollment and rate provisions.