Relates to requiring the commissioner of taxation and finance in conjunction with the health department and the office of temporary and disability assistance to conduct a study on the earned income tax credit and to propose changes thereto.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A4395
SPONSOR: Molitor TITLE OF BILL:
An act requiring the commissioner of taxation and finance in conjunction
with the department of health and the office of temporary and disability
assistance to conduct a study on the earned income tax credit and to
describe changes thereto
PURPOSE OR GENERAL IDEA OF THE BILL:
The purpose of this legislation is to direct commissioner of taxation
and finance in conjunction with the department of health and the office
of temporary and disability assistance to conduct a study on the earned
income tax credit and describe changes to the EITC that could be imple-
mented to offset any losses of public benefits that result from an
increase in earned income.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 of the bill requires the commissioner of taxation and finance
in conjunction with the department of health and the office of temporary
and disability assistance to conduct a study on the earned income tax
credit and describe changes to the EITC that could be implemented to
offset any losses of public benefits that result from an increase in
earned income.
Section 2 requires the study to be submitted to the legislature on or
before April 15, 2025.
JUSTIFICATION:
New York State operates a myriad of public assistance programs with
income eligibility -thresholds. If the applicant is below the income
eligibility threshold, the applicant is eligible for the benefits. If
the applicant is above the income eligibility level, even by a small
amount, the applicant can lose all their benefits.
Unfortunately, these income eligibility thresholds can create tremendous
financial hurdles for those trying to earn enough money to become finan-
cially self-sufficient. In a sense, these income eligibility thresholds
can create financial "brick walls" that discourage a person from accept-
ing a modest increase in salary because such salary increase can be
off-set by the loss of benefits. The impact of these income eligibility
provisions is illustrated in the attached chart.
Currently, the earned income tax credit (EITC) is gradually reduced as a
person's income increases. The EITC could be adjusted; however, to
offset the loss of public benefits and provide an overall gradual
reduction of financials assistance as income increases beyond existing
income eligibility thresholds.
PRIOR LEGISLATIVE HISTORY:
A.6604 2015/2016 - Held for consideration in Ways and Means
A.4263 2017/2018 - Held for consideration in Ways and Means
A.5458 2019/2020 - Held for consideration in Ways and Means
A.4909 2021/2022 - Held for consideration in Ways and Means
A.1879 2023/2024 - Held for consideration in Ways and Means
FISCAL IMPLICATIONS:
The implementation of this bill would not result in any costs because
the required study can be performed with existing staff resources. The
study can also identify the projected net costs, if any, of making
adjustments to the EITC. These changes would likely result in an initial
increase in the EITC that would be offset by a reduction in public
assistance benefits as more individuals leave public assistance
programs.
STATE OF NEW YORK
________________________________________________________________________
4395
2025-2026 Regular Sessions
IN ASSEMBLY
February 4, 2025
___________
Introduced by M. of A. MOLITOR -- read once and referred to the Commit-
tee on Ways and Means
AN ACT requiring the commissioner of taxation and finance in conjunction
with the department of health and the office of temporary and disabil-
ity assistance to conduct a study on the earned income tax credit and
to describe changes thereto
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Earned income tax credit study. 1. The commissioner of
2 taxation and finance in conjunction with the department of health and
3 the office of temporary and disability assistance is authorized and
4 directed to conduct a study on the New York state earned income tax
5 credit and to describe changes to the tax credit that would allow for
6 the adjustment of the credit to offset any loss of public benefits
7 resulting from increased employment, thereby ensuring that a recipient's
8 net income increases whenever they receive an increase in earned income.
9 2. Such study shall be submitted to the legislature on or before April
10 15, 2026.
11 § 2. This act shall take effect immediately.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD07708-01-5
