The increase in the Corporate Business Tax — a focus of last year’s budget battle — is a major factor in the state potentially netting almost $4 billion in tax revenue for fiscal year 2019.
That news came from state Treasurer Elizabeth Muoio on Tuesday during a budget hearing.
“Through the end of April, the CBT is up 91.2 percent,” she told legislators.
“As a result, we have increased the CBT forecast by another $99.4 million, to a total of $3.808 billion for FY19.”
Despite the steep increase, Muoio cautioned that the number could change when businesses file their taxes in October.
“While the CBT is now projected to be up by about $1.5 billion over last year, or about 64.5 percent, there are many caveats that surround this growth,” she said.
“As we discussed last month, the full CBT picture will not be clear until the fall, when corporations which have filed for extensions will be required to submit their final tax returns. We do know that growth is being driven by a combination of factors, chief among them: the 2.5 percent state CBT surtax on earnings over $1 million and expansion of the tax base due to federal tax law changes.”
Muoio attributed much of the increase to the CBT increase that was passed last summer as part of the FY 2019 budget, but also said that other factors, such as repatriation and the tax amnesty program, helped boost revenues.
These would be considered one-time boosts for this year alone.
“We currently estimate that nearly one-half of the CBT growth in FY19 — about $721 million — is comprised of one-time, non-recurring revenues that will evaporate next year,” she said.
That includes:
- $200 million in deemed repatriated dividends;
- $82 million from the tax amnesty program;
- An unexpected, one-time, single-taxpayer payment of $100 million;
- $35 million from one-time tax planning behavior (as a result of the state and local tax cap that was part of federal tax reform);
- Catch-up payments of $304 million from the CBT increase being applied retroactively to the beginning of last year.
