Can the right tax policy spur a manufacturing resurgence?
The state of New York has decided to eliminate the 5.9 percent corporate income tax on its manufacturers. According to James Madore of Long Island Newsday, the move could "help to keep some manufacturers from leaving here for Texas, Florida, the Carolinas and other states with lower costs."
Madore quotes William Wahlig, executive director of the Long Island Forum for Technology, who sees elimination of the income tax on factories as "a welcome relief." Said Wahlig:
"Hopefully, many will reinvest into their companies through new hiring, capital equipment or process improvements, making Long Island a stronger competitor in the world market."
The Alliance for American Manufacturing (AAM) has frequently cited manufacturing's key importance to the domestic economy, including its ability to create spin-off jobs in other sectors. In arguing for the tax cut, New York Governor Andrew Cuomo offered a similar view of manufacturing's overall benefits:
"They provide good quality jobs to a very important sector of our society. Cutting taxes, we believe, helps lure businesses here; it certainly keeps businesses here."
The timing couldn't be more urgent. As Madore reports, manufacturing payrolls totaled 73,400 in February on Long Island, down from 87,400 10 years ago, according to the state Department of Labor. Equally troubling is that, in recent years, the manufacturing-heavy workforce of upstate New York lost 105,000 factory jobs from 2000 to 2008, according to the state comptroller.
In addition to the tax cut, the state will provide manufacturers with a 20 percent tax credit on property taxes.
Kudos to New York for supporting its manufacturers. Now, if only Washington would adopt a similar approach to the nation's industrial sector, and implement a much-needed manufacturing strategy that brings together the most helpful elements of tax, trade, and procurement policies.
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