Assembly opposes Cuomo's tax freeze plan

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The Assembly's Democratic majority has rejected Gov. Andrew M. Cuomo's proposed property tax freeze, but will try to roll back the estate tax to give a break to suburban families and small businesses, according to Assembly Speaker Sheldon Silver.

Silver revealed the negotiating stances Tuesday, as the Assembly and Senate prepared to release their full 2014-15 budget proposals. The legislative proposals will be the basis of negotiations with Cuomo, who released his $142 billion spending plan in January. The budget is due April 1.

Silver also said he expects a measure to legalize marijuana for medical use to be hashed out in those talks. Meanwhile, Senate co-leader Dean Skelos (R-Rockville Centre) said New York City Mayor Bill de Blasio's plan to increase a tax to pay for prekindergarten is dead.

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A major element of Cuomo's budget is a proposal to freeze local property taxes for up to two years by using a state subsidy. But the state would only provide the subsidy if local governments and school districts stay within the state's 2-percent cap on spending growth and commit to long-term spending cuts, such as sharing services and consolidating governments.

Silver (D-Manhattan) said Tuesday that the proposal is too complex. More than 100 local government officials said last week that Cuomo's proposal is impractical or impossible because of the extensive spending cuts already made.

"Somebody's benefit is contingent on some other elected official doing something in order to make them eligible for the freeze," Silver said in criticizing Cuomo's plan.

Senate Republicans also had criticized Cuomo's plan during budget hearings as unwieldy.

Cuomo would provide a tax credit for households with incomes of $500,000 or less, covering as many as 2.8 million households. Typical credits on Long Island and in the northern suburbs would be about $580 in 2015.

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Instead of Cuomo's plan, Silver said the Democratic majority wants to use a "circuit breaker," in which property taxes are reduced based on a household's income and ability to pay. The circuit breaker directs the most savings to lower-income families.

Skelos wouldn't detail his tax freeze plan, but said, "There will be a number of modifications." He said his plan was being negotiated with the Independent Democratic Conference. Republicans and the IDC share majority control.

"Local governments need find ways to cut costs, share services and lower the tax burden in order to make this relief lasting," said Cuomo spokesman Rich Azzopardi. "The governor's tax freeze, which is supported by 73 percent of all New Yorkers, would hold these governments accountable."

Silver, however, appeared to give momentum to Cuomo's proposal to dramatically alter New York's estate tax.

Cuomo seeks to change what he calls the "death tax" because he said it unfairly hits middle-class families in New York City's expensive northern suburbs and on Long Island, as well as cash-poor farmers, and is forcing wealthy retirees to flee the state.

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Cuomo would raise the threshold for the tax. It now applies to estates valued at $1 million, but Cuomo would raise that in stages to the federal standard of about $5 million. He said that would eliminate about 90 percent of estates now covered by the tax.

Cuomo would also reduce the tax rate to 10 percent, from the current 16 percent.

Silver said his conference supports raising the threshold to $3 million, but not the tax rate. "I believe we are going to increase the threshold for exemption, so we will be more sympathetic to small business and farms, individual homes," Silver said.

He also said the Assembly Democrats propose about $400 million more in school aid than Cuomo did, which would put the overall increase at more than 4 percent compared with current spending.

 

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