Increased Utility Rates Are On the Line If New York Raises Corporate Taxes
When polls ask whether the “rich” or “big corporations” should pay higher taxes, too often the spontaneous answer is yes. Framed in ways that make people feel higher taxes are “fair” or even overdue, these questions rarely consider the impacts. Tax increases, particularly on corporations, don’t come without consequences as businesses adapt to a new economy and make adjustments that often show up as higher prices for consumers. In an era of affordability concerns, raising taxes and increasing consumers’ everyday bills are not the right answers.
One glaring example can be found in your utility bill. If the state legislature gets its way and raises the state’s corporate taxes (over the Governor’s objections), this increased tax bill on energy utilities will ultimately be reflected in customers’ energy bills
Under current Senate and Assembly proposals, utilities would see their state corporate income tax rates increase by nearly 30%. Their residential and business customers will feel the hit as these increased taxes are passed through as “allowable costs of service.” So, when Albany discusses affordability, what do they really mean? This proposal will only add to the burden currently faced by consumers and businesses reeling from increased utility bills.
Unfortunately, the Senate and Assembly have proposed roughly $6 billion per year in new and increased taxes on New York State businesses, with some $2.2 billion aimed solely at those operating in New York City. If enacted, they will have adverse impacts on targeted businesses, regardless of their size or sector. Businesses have limited options to pay higher taxes: raise prices, reduce costs (including wages and investments), or reduce returns to investors.
Research shows they do all three, with estimates that over half the cost of higher corporate taxes is borne by consumers in the form of higher prices, and another 28% borne by workers in the form of lower wages.
At a time when “affordability” is a top concern for lawmakers, policies that increase prices and lower wages make little sense.
These proposed increases would be in addition to an estimated $116 billion in total state and local business taxes collected in FY 2024, more than what is collected from businesses in Texas (with a state economy 21% larger than New York’s) and nearly twice as much as collected in Florida.
Even worse, some of these proposals target industry sectors and business activity that are critically important to the state’s economy, including dynamic start-up businesses and businesses that invest significantly in research and development. These include but are not limited to advanced manufacturing, engineering, pharmaceuticals, finance, and venture capital – sectors that are usually highlighted in the state and city’s economic development plans.
These legislative proposals are very concerning to New York’s business community and should concern all New Yorkers who depend on private-sector jobs, new investments, and economic growth.
Heather Mulligan
President & CEO
The Business Council of New York State, Inc.
*sponsored content*
