New York City's top financial officer and possible contender for mayor in 2013, John Liu, proposed on Thursday tax hikes for big businesses and an end to Madison Square Garden's $15 million annual property tax exemption.
The proposals by New York City Comptroller John Liu include tax hikes on private equity firms, which would help offset his plan for $500 million in tax breaks and lowered fines for 90 percent of the city's small businesses.
Liu is expected to vie for the Democratic mayoral nomination for the election in November 2013.
The city could end tax breaks for big companies - more than $250 million of which were handed out last year, Liu said.
The city could also eliminate its $15 million annual property tax exemption for Madison Square Garden, the indoor arena in midtown Manhattan that's home to the New York Knicks basketball team. Madison Square Garden has been exempt from paying taxes on real property since 1982 under New York state law.
The arena is owned by The Madison Square Garden Co, which also owns the Knicks and other professional sports teams. The company also owns Radio City Music Hall, the Beacon Theatre and others venues, as well as television networks.
Liu also proposed examining tax breaks for special interests. Insurance companies, for instance, have not paid the general corporation tax since 1974, at a cost of $300 million annually to the city, he said.
Private equity firms could also start paying the unincorporated business tax for carried interest or gains from assets being held for investment. The exemption costs New York City about $200 million a year, Liu said.
Liu's package would use the revenue generated by those measures to offset his plan to ease the tax burden for small businesses.
He proposed ending the city's general corporation tax for all businesses with liabilities under $5,000 -- about 240,000 business in the city, or 85 percent of those that currently pay the tax.
His plan would also reduce some fines, as well as exempt businesses that make less than $250,000 in annual income from the city's unincorporated business tax.
The proposals would have to be approved by the governor and state legislature after a request by the city council.
The city is facing a possible $2.7 billion gap in fiscal 2014 that could grow to $3.8 billion the following year, Liu said.
(Reporting by Hilary Russ; Editing by Phil Berlowitz)