Sources: Cuomo tax commission favors a ‘circuit-breaker’

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ALBANY—A Cuomo-appointed tax commission due to report early next month is leaning toward a “circuit breaker” to ease property tax burdens, sources said. 

Three people familiar with the commission's deliberations told Capital that rather than an income-tax cut, which was hinted at by committee co-chair and former governor George Pataki, committee members are instead focusing on some sort of property tax “circuit-breaker,” where individuals would get a break on local levies if their property taxes were adjudged to be too high as a function of their income.

The exact parameters are not set, the sources said, and the relief could be directed either as a separate check, an income tax credit or as direct relief in one's tax bill—similar to the STAR school tax rebate. The commission is also examining how relief can be extended to businesses; one person familiar with is work said freezing tax loads in place is under discussion.

The commission, which Pataki co-chairs along with SUNY Board of Trustees chairman H. Carl McCall, will meet privately in Manhattan at 2:30.

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Pataki has hinted that the state tax commission he co-chairs would focus on an income tax cut. (The Wall Street Journal on Monday quoted a source close to Pataki as saying he was hoping its work could include such a cut.) Pataki cut taxes all four years of his first term in office.

But Cuomo, a Democrat, said during a Tuesday radio interview that his budgeters are now projecting the “essence” of a surplus, echoing earlier comments by aides that tax cuts could be accommodated if state agencies hold spending to a two percent increase. He also said linking property tax relief and income “makes sense.”

The governor also described the state's property-tax burden—which he addressed during his first year in office by imposing a two-percent cap on local increases—as “crushing.”

Democrats have been putting forward circuit-breaker proposals for years; the concept was a favorite of Jeff Klein, who now leads the Senate's Republican-allied Independent Democratic Conference. State Senator Liz Krueger, a liberal Democrat from Manhattan, is currently pushing a circuit-breaker bill.

Liberal advocates also support the idea, but say it should be paid for not by holding spending near flat, but by increasing taxes on upper-income earners. Unshackle Upstate, a right-leaning business group, tweeted dismay at Cuomo's comments on the radio.

The Pataki-McCall effort is Cuomo's second tax commission. The first one, chaired by McCall and banker Peter Solomon recommended a slew of revenue-neutral changes to the tax code, including the extension of the sales tax to digital products like iTunes songs. A separate analysis prepared for that panel criticized existing business tax credits, and recommended the state's film production credit be scaled back.

Pataki declined to be interviewed, and his spokesman declined to comment on the commission's work. McCall did not return a call.