With New York City's mass transit system needing a financial shot in the arm, the state's legislature is on the verge of passing a package of taxes on business to pay part of the cost. But many firms, especially the large oil companies which are the main targets of some of the proposals aren't sitting still.
Mobil Corp. made the most visible challenge in a full-page advertisement in yesterday's New York Times, charging that the taxes would force businesses and jobs out of the state and have a "chilling effect" on efforts to attract new firms. David Langdon, a spokesman for Assembly speaker and tax-package backer Stanley Fink, said the oil companies have mounted a "major lobbying attack" on the five tax proposals.
While denying that the advertisement was a veiled threat that Mobil would leave if the taxes are enacted, a Mobil spokesman said that "for the tax to be applied to a major corporation that's headquartered in New York and operates in New York makes for a special concern on our part."
J. W. Dalgetty, a Mobil attorney who has specialized in the tax battle, said, "It forces companies who have a significant presence in this state to take a hard look at that presence." By using payroll to compute oil companies' income tax, he said, the measure gives companies an incentive to move jobs out of the state.
If Mobil did move its headquarters, the most logical place for the corporation to relocate would be the Washington area, where the giant corporation brought its U.S. refining and marketing division last summer.
Legislators and staffers expected action on the New York tax bills as early as last night, and members of both houses met in party caucuses for most of yesterday to debate the bills.The tax package has received the backing of Democrat Fink as well as Warren J. Anderson, the majority leader of the Republican-controlled Senate.
The oil companies object most to two parts of the package. The first is a new tax of three-fourths of a percent on the gross receipts that oil companies receive in the state, which backers expect to yield $150 million over two years. The second is a $150 million change in the state's corporate income levy that would tax a portion of oil companies' worldwide earnings, with the taxable portion computed according to a complicated formula that takes into account the firms' payroll, sales and property in the state.
Other parts of the package would tax large capital gains on New York City real estate deals, raise slightly the sales tax in the city and the surrounding area, and change the way interstate utility companies are taxed. All revenues except for 45 percent of the gross receipts tax would go to New York City's mass transit system, according to an aide to majority leader Anderson.
Tax advocates say that, since companies based in New York reap the benefits of an efficient mass transit system, they should pay part of the costs. "This system contributes to the growth and profitability of all businesses in the area," said Richard Ross, a spokesman for Anderson. "We see no reason why they should not bear some of the costs for this."
Mobil officials, among others, feel singled out. The new income tax "will triple or quadruple our taxes paid to the state of New York," said Dalgetty. "We're talking about several millions of dollars."
Anderson aide Langdon said the Mobil statements "are a pressure tactic and a scare tactic." Along with other tax supporters, he charged the company with exaggerating the taxes' effect on employment in the state.
"I think a main reason they've gone all out on this one." said Langdon, "is that New York is still looked to as precedent-setting. It's the implication that worries them as much as the extra money they'll have to pay."