Immigration Reform 2013-14: Will Comprehensive Reform Bring More Jobs for Americans?

December 31, 2013. Northern Voices Online considers the prospects for immigration reform, focusing on the economic benefits that political action would bring, focusing on the immigrant role in small business ownership.

The Fiscal Policy Institute Businesses mentioned in a June 2012 study that immigrant owned businesses employ nearly five million Americans in 2010 and generated an estimated $776 billion in revenue.

Immigration Reform 2013 News: Studies Show Immigrants Help Boost the U.S. Economy, Create More American Jobs

December 30, 2013. The Latino Post reviews reports about the economic impacts of immigrants on the U.S. economy, including one by the Fiscal Policy Institute.

Research proves that immigration and economic progress go hand in hand. Contrary to fears that immigrants will take American jobs and make unemployment even worse, studies show that mending our broken U.S. immigration system would actually help end America’s job crisis….

According to a 2012 study from the Fiscal Policy Institute, immigrant-owned small businesses employed nearly five million Americans in 2010 and generated an estimated $776 billion in revenue. Plus, the Partnership for a New American states that more than 40 percent of Fortune 500 companies were founded by immigrants or first generation Americans.

Revitalizing Baltimore Through Immigration

December 26, 2013. An opinion piece in the Baltimore Sun draws extensively from the Fiscal Policy Institute’s research on small business ownership, and describing city efforts to make it clear that immigrants are welcome.

Baltimore Mayor Stephanie Rawlings-Blake said Baltimore is “open for business, particularly in the area of Latino immigrants. We’ve actively recruited Latino immigrants to Baltimore, and when they come here, they’re thriving. Many have opened businesses, employed individuals. … I think it’s a win-win.”

Examining the Final Report of the Pataki/McCall Commission

December 20, 2013. Last week, Governor Andrew Cuomo accepted the final report of the New York State Tax Relief Commission that he had appointed earlier this Fall. This commission, which was co-chaired by former Governor George Pataki and former State Comptroller H. Carl McCall, had been charged by Governor Cuomo with identifying ways to provide property and business tax relief to New York’s homeowners and businesses.

Today, the Fiscal Policy Institute joined with six of New York’s leading progressive groups in releasing a report analyzing and critiquing the recommendations of the Tax Relief Commission. That report, which is entitled Taking New York Backwards: Pataki Commission’s Tax Cuts Exacerbate Inequality and Favor the Wealthy, details the flawed budgeting and severe inequity of the recommendations, which fail to adequately address urgent needs in education funding, health care, infrastructure investments, and progressive tax relief for lower and middle-income families. While we have criticized some of the specific recommendations of the Governor Cuomo’s other tax advisory commission, the Tax Reform and Fairness Commission, chaired by investment banker Peter Solomon and former Comptroller McCall, that Commission’s report shows that it is possible to implement tax cuts that make sense from a tax fairness and/or an economic competitiveness perspective without reducing revenue.

The Pataki Commission delivered on the Governor’s charge to focus on homeowner property tax relief and business tax cuts by recommending $1 billion in property tax relief for homeowners, and $706 billion in corporate tax cuts. But, the Commission also went beyond that charge in proposing two additional measures which, if and when fully implemented, would deliver $4 billion a year in tax relief to the state’s wealthiest residents. These two measures involve

  • Reductions in New York’s estate tax which applies to only the three percent largest estates by increasing the threshold, below which there is no tax, from $1 million to $5.25 million, and reducing the tax rate for estates above $5.25 million from 16% to 10%. The Commission’s report estimates the cost of its proposed Estate Tax cut, as it is phased in over time, at $381 million in the 2016-17 state fiscal year, $627 million in FY 2017-18 and $772 million in 2018-19.
  • The reduction in 2018 of the state’s current, temporary top Personal Income Tax rate of 8.82%, which applies only to families with taxable incomes above $2 million a year and individuals with taxable incomes above $1 million, to the permanent top rate of 6.85%. This would represent a 22.4% reduction in the personal income taxes paid by the highest-income one-half of one percent of New York taxpayers. No estimate is given by the Commission of the cost of this proposal but based on state budget reports, we know that the revenue lost from this proposal would be at least $3.2 billion a year.

After a full analysis, our conclusion is that even businesses should be questioning the recommendations made by the Pataki Tax Commission. Cutting $1.5 billion in taxes per year for corporations ($706 million) and the wealthy ($772 million in estate tax reductions) will leave New York State little room for programs that actually promote economic growth. Ensuring the financial and economic viability of the state’s local governments is essential if New York is to have a strong business climate. And strong schools to provide well educated workers are much more important to the success of New York State businesses than the dollars they will receive from these ill-conceived tax giveaways. If the top personal income tax rate on millionaires were to be cut as recommended by the Commission, the situation would be substantially worse.

Corporate Tax Cuts

Corporate tax cuts have not been shown to promote economic growth in the past and are an expensive way to make a symbolic statement about being open for business. By using resources that could be used for critical local infrastructure investments and for the provision of adequate state aid for education, the business tax cuts proposed by the Commission may in fact cause business to leave New York. Businesses decide where to locate on the basis of the total economic environment not just taxes as the Pataki Commission’s Report implies.

Estate Tax

The recommended changes to the estate tax will have little impact on New York’s economy while cutting greatly needed revenues. The NYS Department of Taxation and Finance has shown that millionaires are not leaving the state because of the estate tax. The estate tax cuts recommended by the Commission will cost nearly $800 million a year when fully phased in. The bulk of this windfall would go to a relative handful (fewer than 200) of the very wealthiest estates valued at over $10 million each. The Pataki Commission can only justify this giveaway by totally ignoring research by the State’s tax policy experts who, in the Department of Taxation and Finance’s recent report on the estate tax, concluded that  “Migration studies regarding the impact of taxes such as the estate tax have shown that taxes generally are not a major factor in the decision of where to live or retire.” These studies generally show that taxes have very little impact on cross-state migration and estate tax revenues.

Property Tax Relief

The property tax freeze proposed by the Commission is clearly regressive. Homeowners with more expensive homes (and normally higher incomes) will get larger tax breaks than owners of more modest homes, even when those latter households have property taxes that are extremely high relative to their incomes. Moreover, the freeze proposal will send less tax relief to our hard-pressed cities. Targeted tax relief is a much better plan and the Circuit Breaker approach, also recommended in the Commission report, will give a much bigger bang for the buck IF designed and implemented appropriately. Giving meaningful relief to those hardest hit by property taxes, in addition to being progressive and fair, can be done in a way that is both revenue neutral and good for economic growth.

Fiscal Policy Institute Names Frederick Floss Executive Director

December 19, 2013. The Board of Directors of the Fiscal Policy Institute announced today that it has appointed Frederick G. Floss, professor of economics and finance at Buffalo State College, as FPI’s new Executive Director.

Floss is the Fiscal Policy Institute’s third executive director. He succeeds Frank J. Mauro who led FPI for the past 20 years.

“Fred Floss brings an excellent combination of knowledge, skills and experiences to the leadership of FPI and to the discussion of the key fiscal and economic issues facing New York State,” said FPI Board Chair Michael Burgess. “Fred’s knowledge of economics and finance, his research credentials and his commitment to social and economic justice along with his years of experience in the New York State policy making process will be important in moving FPI forward.”

Floss has taught at Buffalo State College since 1983 and has been a full professor of economics and finance at Buffalo State since 1999. He was Vice President for Academics of the United University Professions for 8 years and served as the chief negotiator for UUP’s 2007-2011 contract with New York State. He also serves as the Co-Director of Buffalo State’s Center for Economic Education and is a Director of the Buffalo Fiscal Stability Authority.

“I am honored to have been chosen as FPI’s Executive Director and excited about the opportunity to work with FPI’s excellent and dedicated staff. I look forward to working with a strong committed board to further the development and implementation of public policies and private practices that improve the lives of low- and middle-income New Yorkers,” Floss said. “I am also proud to announce that Frank Mauro has agreed to become executive director emeritus. His leadership over the last 20 years has helped all New Yorkers and I am happy he will continue to work with me and FPI.”

Holder of a Ph.D. in Economics from the University at Buffalo, Floss has taught a wide variety of courses in both economics and finance over the past 30 years. His primary fields of concentration are public finance, forensic economics and microeconomic theory.

“Fred Floss will be an outstanding leader for FPI as the organization continues to produce fiscal and economic analysis that lawmakers, media, and the public rely on,” said Nicholas Johnson, Vice President for State Fiscal Policy at the Center on Budget and Policy Priorities. “For two decades FPI has been a leader in the fight for fair and sound fiscal policies, and we look forward to continuing our collaboration with FPI as New York State and the rest of the nation face new and challenging policy decisions.”

Full Press Release