The recently enacted New York State budget featured a host of revenue-enhancing measures, include tax hikes on businesses and corporations. Thomas R. Fazio, Partner, Blodnick Fazio & Clark, says the increase in the corporate franchise tax — which is part of the budget — will result in more companies making their way out of the Empire State and leaving their workers behind.
On April 6, the New York State Legislature reached an agreement on its $212 billion budget with Governor Andrew Cuomo. As part of the budget, the state will raise the corporate franchise tax from 6.5% to 7.25% for the next three years. This applies to businesses with incomes above $5 million.
According to the state, between the tax increases on business income and a raise in the capital base method of liability estimation — which exempts certain manufacturers and emerging technology companies, as well as cooperative housing corporations — it is expected to take in $1.75 billion in revenue by 2023. But Mr. Fazio says the economic benefits may be wiped out if companies decide to move to states with lower corporate tax burdens.
“The government cannot collect any revenue from these companies if they move out of the state,” Mr. Fazio says. “The workers will be hurt the most. They may wind up losing their jobs because they can’t afford to relocate. Like their employers, they are saddled with heavy tax obligations. If your company is about to face these tax hikes and looking to retain its workforce, consult a business law attorney immediately.”