A10139 Summary:

BILL NOA10139
 
SAME ASSAME AS UNI. S07667
 
SPONSORThiele
 
COSPNSRSchimminger, Stirpe, Saladino, Barclay, Hawley, Raia, Crouch, Gjonaj, Crespo, Blake, Colton, Magnarelli, Woerner, McDonald, Cahill, Bichotte, Pichardo, Mosley, Duprey, McDonough, Ra, Murray, Montesano, DiPietro, Walter, Lawrence, McKevitt
 
MLTSPNSRCeretto, Cook, Englebright, Fitzpatrick, Magee
 
Amd 210 & 612, Tax L
 
Enacts the "small business tax reform act"; relates to the business income base rate and certain small business taxpayers.
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A10139 Actions:

BILL NOA10139
 
05/12/2016referred to ways and means
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A10139 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A10139
 
SPONSOR: Thiele
  TITLE OF BILL: An act to amend the tax law, in relation to the busi- ness income base rate and certain small business taxpayers   PURPOSE: Creates the "Small Business Tax Reform Act."   SUMMARY OF PROVISIONS: Section 1. Cites the "Small Business Tax Reform Act." Section 2. Amends subparagraph (iv) of paragraph (a) of subdivision 1 of Section 210 of the tax law relating to tax rates of small businesses, including qualified New York manufacturers. Section 3. Paragraph 39 of subsection c of the tax law is amended relat- ing to the business income exclusions for taxpayers who are a small business with business income and/or farm income. Section 4. Effective Date   JUSTIFICATION: New York's small businesses employ over half or 3.9 million of the state's private workforce. Small businesses employ 51.1% of New York's non-farm, private-sector workplace. Currently, small businesses make up 99.0 percent of all employers in the state. In New York, small busi- nesses created 154,264 net new jobs in 2012. The biggest gain was in the smallest firm size category of 1-4 employees. This legislation will foster even greater growth as attempts to rebuild our economy continues. It provides that Small businesses that are taxed under the Corporate Franchise Tax to have their tax rate cut from 6.5% to 2.5% by 2018, under a three (3) year phase-in that would reduce the tax rate to 3.25% in 2016, 2.9% in 2017 and 2.5% in 2018 and thereafter. In addition, the maximum income level for such a rate would be increased from $290,000 to $500,000. The income exclusion rate for small businesses and farmers with less than $500,000 of income would be increased from 5% to 20% by 2018, also with a three (3) year phase-in of 10% in 2016, 15% in 2017, and 20% in 2018 and thereafter. New York State's small businesses play a critical role in generating economic prosperity. The effort poured into them by ordinary citizens across the state reflects the hard work and determination that is indic- ative of the state's entrepreneurial spirit. This legislation supports these engines of growth and recognizes their incredible contributions to the State of New York by alleviating a portion of the state tax burden on these businesses.   LEGISLATIVE HISTORY: 2016: New legislation   FISCAL IMPLICATIONS: To be determined.   EFFECTIVE DATE: This act shall take effect immediately.
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A10139 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
            S. 7667                                                 A. 10139
 
                SENATE - ASSEMBLY
 
                                      May 12, 2016
                                       ___________
 
        IN SENATE -- Introduced by Sen. LAVALLE -- read twice and ordered print-
          ed,  and  when  printed  to  be committed to the Committee on Investi-
          gations and Government Operations
 
        IN ASSEMBLY -- Introduced by M. of A. THIELE -- read once  and  referred
          to the Committee on Ways and Means
 
        AN  ACT  to  amend  the tax law, in relation to the business income base
          rate and certain small business taxpayers
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1.  Short title.  This act shall be known and may be cited as
     2  the "small business tax reform act".
     3    § 2. Subparagraph (iv) of paragraph (a) of subdivision  1  of  section
     4  210  of the tax law, as amended by section 12 of part A of chapter 59 of
     5  the laws of 2014, is amended to read as follows:
     6    (iv) (A) for taxable years beginning before January first,  two  thou-
     7  sand  sixteen,  if the business income base is not more than two hundred
     8  ninety thousand dollars the amount shall be six and one-half percent  of
     9  the  business  income base; if the business income base is more than two
    10  hundred ninety thousand dollars but not over three hundred ninety  thou-
    11  sand  dollars the amount shall be the sum of (1) eighteen thousand eight
    12  hundred fifty dollars, (2) seven and one-tenth percent of the excess  of
    13  the  business  income  base over two hundred ninety thousand dollars but
    14  not over three hundred ninety thousand dollars and (3) four and  thirty-
    15  five  hundredths  percent of the excess of the business income base over
    16  three hundred fifty thousand dollars but not over three  hundred  ninety
    17  thousand dollars;
    18    (B)  for  taxable years beginning on or after January first, two thou-
    19  sand sixteen and before January first, two thousand  seventeen,  if  the
    20  business  income base is not more than five hundred thousand dollars the
    21  amount shall be three and one-quarter percent  of  the  business  income
    22  base;  if  the  business  income base is more than five hundred thousand
    23  dollars but not over six hundred thousand dollars the  amount  shall  be
    24  the  sum  of (1) sixteen thousand two hundred fifty dollars, (2) six and
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD15209-01-6

        S. 7667                             2                           A. 10139
 
     1  one-half percent of the excess of the business  income  base  over  five
     2  hundred  thousand  dollars but not over six hundred thousand dollars and
     3  (3) thirty-two and one-half percent of the excess of the business income
     4  base  over  five hundred fifty thousand dollars but not over six hundred
     5  thousand dollars;
     6    (C) for taxable years beginning on or after January first,  two  thou-
     7  sand  seventeen  and before January first, two thousand eighteen, if the
     8  business income base is not more than five hundred thousand dollars  the
     9  amount shall be two and nine-tenths percent of the business income base;
    10  if  the  business income base is more than five hundred thousand dollars
    11  but not over six hundred thousand dollars the amount shall be the sum of
    12  (1) fourteen thousand five hundred dollars, (2) six and one-half percent
    13  of the excess of the business income base  over  five  hundred  thousand
    14  dollars  but  not  over  six hundred thousand dollars and (3) thirty-six
    15  percent of the excess of the business  income  base  over  five  hundred
    16  fifty thousand dollars but not over six hundred thousand dollars;
    17    (D)  for  taxable years beginning on or after January first, two thou-
    18  sand eighteen, if the business income base is not more than five hundred
    19  thousand dollars the amount shall be two and  one-half  percent  of  the
    20  business  income  base;  if  the  business income base is more than five
    21  hundred thousand dollars but not over six hundred thousand  dollars  the
    22  amount shall be the sum of (1) twelve thousand five dollars, (2) six and
    23  one-half  percent  of  the  excess of the business income base over five
    24  hundred thousand dollars but not over six hundred thousand  dollars  and
    25  (3)  forty  percent  of the excess of the business income base over four
    26  hundred fifty thousand  dollars  but  not  over  five  hundred  thousand
    27  dollars;
    28    §  3. Paragraph 39 of subsection (c) of section 612 of the tax law, as
    29  added by section 1 of part Y of chapter 59  of  the  laws  of  2013,  is
    30  amended to read as follows:
    31    (39)  In  the case of a taxpayer who is a small business who has busi-
    32  ness income and/or farm income as defined in  the  laws  of  the  United
    33  States,  an  amount  equal  to three percent of the net items of income,
    34  gain, loss and deduction attributable to such business or farm  entering
    35  into  federal adjusted gross income, but not less than zero, for taxable
    36  years beginning on or after January first, two thousand thirteen[,]  but
    37  before  January  first,  two thousand fourteen; an amount equal to three
    38  and three-quarters percent of the net items of income,  gain,  loss  and
    39  deduction  attributable  to  such business or farm entering into federal
    40  adjusted gross income, but not less than zero, for taxable years  begin-
    41  ning  on or after January first, two thousand fourteen[, and] but before
    42  January first, two thousand fifteen; an amount equal to five percent  of
    43  the  net  items of income, gain, loss and deduction attributable to such
    44  business or farm entering into federal adjusted gross  income,  but  not
    45  less  than  zero, for taxable years beginning on or after January first,
    46  two thousand fifteen but before January first, two thousand sixteen;  an
    47  amount  equal  to ten percent of the net items of income, gain, loss and
    48  deduction attributable to such business or farm  entering  into  federal
    49  adjusted  gross income, but not less than zero, for taxable years begin-
    50  ning on or after January first, two thousand sixteen but before  January
    51  first, two thousand seventeen; an amount equal to fifteen percent of the
    52  net items of income, gain, loss and deduction attributable to such busi-
    53  ness  or  farm entering into federal adjusted gross income, but not less
    54  than zero, for taxable years beginning on or after  January  first,  two
    55  thousand  seventeen but before January first, two thousand eighteen; and
    56  an amount equal to twenty percent of the net items of income, gain, loss

        S. 7667                             3                           A. 10139

     1  and deduction attributable to such business or farm entering into feder-
     2  al adjusted gross income, but not less  than  zero,  for  taxable  years
     3  beginning  on  or  after January first, two thousand eighteen.  Provided
     4  that  such business or farm income is less than or equal to five hundred
     5  thousand dollars.  For the purposes of this paragraph,  the  term  small
     6  business  shall mean a [sole proprietor] business or a farm business who
     7  employs one or more persons during the taxable  year  and  who  has  net
     8  business income or net farm income of equal to or less than [two hundred
     9  fifty]  five  hundred  thousand  dollars. For the purposes of this para-
    10  graph, if the taxpayer is a member, partner, or shareholder of a limited
    11  liability company, partnership or S-corporation, the taxpayer will  only
    12  be  eligible under this paragraph if the New York source gross income of
    13  the limited liability company, partnership  or  S-corporation  does  not
    14  exceed  one million dollars.  New York source gross income is the sum of
    15  the members, partners, or shareholders shares of  federal  gross  income
    16  from  the  limited  liability  company,  partnership,  or  S-corporation
    17  derived from or connected with New York sources, determined  in  accord-
    18  ance with the provisions of section six hundred thirty-one of this arti-
    19  cle as if those provisions and any related provisions expressly referred
    20  to a computation of federal gross income from New York sources.
    21    § 4. This act shall take effect immediately.
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