NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A6449
SPONSOR: Englebright (MS) TITLE OF BILL: An act to amend the real property tax law and the tax
law, in relation to the "Middle Class STAR" rebate program; to amend the
tax law, in relation to creating the middle class circuit breaker tax
credit; to amend the administrative code of the city of New York, in
relation to an enhanced personal income tax credit in such city; and to
amend the education law, in relation to establishing limitations upon
school district tax levies
PURPOSE OR GENERAL IDEA OF BILL:
Restores middle class STAR rebate program; Creates a circuit breaker
personal income tax credit; and places a cap on school district tax
levies.
SUMMARY OF SPECIFIC PROVISIONS:
The real property tax law is amended to add a new section 1306-b restor-
ing the middle class STAR rebate program to its previous position in
law.
Adds a new section 178 to the tax law restoring the middle class STAR
rebate program to its previous place in law.
In 2009, the middle class STAR rebate program will be restored at 2008
benefit levels for homeowners with household incomes of $250,000 or
less.
In 2010 and thereafter, the middle class STAR rebate program will only
be available to seniors with household incomes of $150,000 or less.
Amends subparagraph (e) of paragraph I of subsection (e) of section 606
of the tax law to define "qualifying real property taxes" for purposes
of calculating a circuit breaker tax credit.
Adds a new subsection (qq) to section 606 of the tax law to provide for
a middle class circuit breaker tax credit. The credit will be based on
the income of the household and the percentage that said household pays
for property taxes.
CIRCUIT BREAKER FOR CITY OF NEW YORK, AND THE COUNTIES OF NASSAU,
SUFFOLK, ROCKLAND, WESTCHESTER, PUTNAM, ORANGE AND DUTCHESS:
Household Adjusted Gross Income Middle Class Circuit
Breaker Credit
$120,000 or less Net property taxes paid in
excess of 6% of said income
can receive a personal income
tax credit of 70% of the overage.
$120,001-$175,000 Net property taxes paid in
excess of the sum of $7,200 and
7% of income above $120,000
can receive a personal income
income tax credit of 70% of the
overage.
$175,001- $250,000 Net property taxes paid in
excess of the sum of $11,050
and 8% of income above
$175,000 can receive a personal
income tax credit of 70% of the
overage.
$250,001+ No credit.
CIRCUIT BREAKER FOR, ALL OTHER, COUNTIES IN THE STATE:
Household Adjusted Gross Income Middle Class Circuit
Breaker Credit
$90,000 or less Net property taxes paid
in excess of 6% of said
income can receive a
personal income tax credit
of 70% of the overage.
$90,001 - $150,000 Net property taxes paid in
excess of the sum of $5,400
and 7% of income exceeding
$90,000 can receive a personal
income tax credit of
70% of the overage.
$150,001 - $250,000 Net property taxes paid in
excess of the sum of $9,600
and 8% of income exceeding
$150,000 can receive a personal
income tax credit of
70% of the overage.
$250,001 + No credit.
Renters will be eligible to claim the middle class circuit breaker bene-
fit with eligibility to be determined based on a "property tax equiv-
alent" of 15% of their rent in 2010 and 20% every year thereafter.
To be eligible for the middle class circuit breaker benefit, homeowners
and renters must live in their residences for three years.
The middle class circuit breaker also defines the measure of income for
families earning at least 50% of their total income from farming as
modified adjusted gross income instead of adjusted gross income for
purposes of the circuit breaker income tax credit.
Renters will be eligible to claim the middle class circuit breaker bene-
fit with eligibility to be determined based on a "property tax equiv-
alent" of 15% of their rent in 2010 and 20% every year thereafter.
Amends the tax law and the New York City Administrative Code to restore
the NYC enhanced PIT credit to its former place in law. In 2009, the NYC
enhanced PIT credit will be restored at 200B benefit levels, adjusted
for inflation, for taxpayers with household incomes of $250,000 or less.
In 2010 and thereafter, the enhanced PIT credit will only be available
to seniors with household incomes of $150,000 or less. All other taxpay-
ers will receive the standard PIT credit. Adds a new section 1307 to
the real property tax law to establish a real property tax levy cap for
all school districts other than city school districts of cities with a
population of 125,000 or more (the "Big 5" school districts).
UNDER THE TAX LEVY CAP: A school district's tax levy limit could
increase by up to the lesser of 4% or 120% of the annual increase in the
consumer price index (CPI);
A school district would be permitted to "bank" unused tax, levy capacity
from prior years, but could use this carryover levy capacity to increase
its tax levy only by an additional 1.5% in any year;
Tax levy limits would be subject to "underride" through voter-initiated
propositions;
Once the foundation aid formula is fully phased in, school districts
determined not to be meeting the local expected contribution under the
foundation aid formula would be subject to an eased tax levy limit that
would permit the tax levy limit to increase by up to the lesser of 5% or
150% of CPI, and would also be subject to eased vote thresholds for tax
levy limit override propositions; and
In the event a district's actual tax levy exceeds its authorized levy
due to clerical or technical errors, the erroneous excess levy must be
placed in reserve to offset the levy for the next school year.
JUSTIFICATION:
The Commission on Property Tax Relief issued its Preliminary Report and
Recommendations on June 3, 2008. The Commission's report explores the
root causes of the growth in property taxes, and highlights several key
facts:
*New York State's local taxes are the highest in the nation, and are 79%
above the national average;
*Outside of New York City, school property taxes make up 62% of the
property tax burden;
*Nine of the top ten counties in the country with the highest tax rates
relative to home values are in upstate New York;
*Nassau, Suffolk, Rockland and Westchester Counties are in the nation's
top ten in terms of the percentage of household income that must be
devoted to paying property taxes; and
*Property tax levies are currently rising at more than twice the rate of
inflation and salary growth.
Incorporating recommendations from reports of the New York State Commis-
sion on Property Tax Relief, this legislation will reduce the crushing
burden of property taxes on local residents by providing targeted income
tax relief to New Yorkers who pay the highest property taxes, relative
to their incomes. The amended bill will also provide much needed relief
to the three million New York State households that lost their STAR. And
Enhanced STAR rebate checks in the recently enacted 2009-2010 state
budget.
The middle class STAR rebate program and New York City Enhanced PIT
credit would be restored immediately for 2009 at the same level of bene-
fits paid in 2008. And starting in 2010, rebate checks issued to seniors
earning less than $150,000 under this program will subtract out the
amount of any circuit breaker tax credit already claimed in the same
taxable year. This will avoid duplication of benefits while insuring
that seniors receive the maximum amount available to them under either
plan.
The circuit breaker tax credit will provide targeted tax relief, begin-
ning in 2010, to households earning up to $250,000 per year and paying
more than a threshold percentage of their income on local property
taxes. The precise threshold of 6, 7 or 8% would be based on rising
household income categories, with the lowest income households (earning
up to $90,000 per year upstate or $120,000 per year downstate) qualify-
ing if property taxes consume more than 6% of their income.
PRIOR LEGISLATIVE HISTORY:
2009-10 A9428 referred to real property taxation
2011-12 A5538 referred to real property taxation
2013-14 A5791 referred to real property taxation
FISCAL IMPLICATIONS:
To be determined.
EFFECTIVE DATE:
This act shall take effect immediately.
