Faso Proposes $11 Billion New York Tax Cut

by Leroy Baker, Tax-News.com, New York

25 September 2006

John Faso, Republican candidate for the governor of New York state, has proposed an $11 billion package of tax cuts designed to foster investment and spur job creation across the state.

Under the Faso plan, the state tax on capital gains and dividends would be eliminated over a four year period and new capital investment will be tax free immediately. Elimination of this tax would set New York apart as the only state in the nation with an income tax that fully exempts these sources of income from taxation.

According to Faso, these proposals would save taxpayers approximately $3.5 billion and create hundreds of thousands of private sector jobs.

"This type of incentive for entrepreneurship and investment will do more for our economy than all of the state's current economic development programs combined," said Faso.

"Eliminating capital gains and dividends taxation will be a powerful stimulant for growth that will attract more private-sector investment than ever before," he added.

The Faso plan also cuts personal income taxes in New York by eliminating state income tax for married couples earning up to $50,000 and single taxpayers earning up to $25,000, taking approximately 1.5 million people out of income tax. In addition, the tax code will be cut from 5 brackets to 4, the brackets indexed to inflation, and all income tax rates will be reduced.

Also, the so-called 'recapture' provisions, which requires the wealthy to pay the highest rate on all their income, will be abolished.

When fully implemented, Faso claims that the combined State and New York City marginal income tax rate will be below 10% for the first time in 50 years.

Faso's Democratic opponent, New York Attorney General Eliot Spitzer, has questioned whether the state can afford such an ambitious plan, the cost of which would rise to $14 billion when combined with Faso's previous proposals to cut property and corporate taxes and to eliminate the state’s estate taxes

However, Faso brushed aside such concerns.

"Tax cuts create jobs," he argued.

"Those who say that ‘government can't afford it' are really saying ‘taxpayers should pay even more to live in New York," he said.

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