NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7464
SPONSOR: Farrell TITLE OF BILL: An act to amend the tax law, the administrative code
of the city of New York, chapter 877 of the laws of 1975, chapter 884 of
the laws of 1975 and chapter 882 of the laws of 1977, relating to the
imposition of certain taxes in the city of New York, in relation to
postponing the expiration of certain tax rates and taxes in the city of
New York
SUMMARY OF PROVISIONS:
Sections 1 and 10 of the bill amend section 1212-A(a)(3) of the Tax Law
and section 11-2040(a) of the New York City Administrative Code ("Admin-
istrative Code"), relating to New York City's ("City") 4.5 percent sales
tax on credit rating and credit reporting services. The tax is set to
expire on November 30, 2017. The Tax Law amendment authorizes the City
to impose the tax for an additional three years (until November 30,
2020). The Administrative Code amendment imposes the tax for an addi-
tional three years (until November 30, 2020).
Section 2 of the bill amends Tax Law section 1301(a), relating to the
tax on the personal income of residents of the City. The amendment of
Tax Law section 1301(a)(1) authorizes the City to extend the existing
rates of the personal income tax (the rates set forth in Tax Law section
1304(a)(1)(A), (a)(2)(A) and (a)(3)(A)) for an additional three. years
(for taxable years beginning before 2021) and delays the implementation
of lower personal income tax rates (the rates set forth in Tax Law
section 1304(b)) for three years (until taxable years beginning after
2020). Section 6 of the bill makes a conforming change to the opening
paragraph of Administrative Code section 11-1701, which relates to the
tax on the personal income of residents of the City. The amendment
extends the existing personal income tax rates (the rates set forth in
11-1701(a)) for an additional three years (for taxable years beginning
before 2021) and delays the implementation of lower personal income tax
rates (the rates set forth in 11-1701(b)) for three years (until taxable
years beginning after 2020).
Sections 3 and 7 of the bill amend Tax Law section 1304(b) and Adminis-
trative Code section 11-1701(b), relating to the tax on the personal
income of residents of the City. They make conforming, changes to the
lower personal income tax rates, delaying their implementation for three
years (until taxable years beginning after 2020).
Sections 4 and 8 of the bill amend Tax Law section 1304-B(a) and Admin-
istrative Code section 111704.1(a)(1), relating to the additional tax on
City taxable income. The Tax Law amendment authorizes the City to impose
the additional tax for an additional three years at the rate of 14
percent (for taxable years beginning before 2021) and extends the
authority of the City to reduce the additional tax by local law for
taxable years beginning before 2021. The Administrative Code amendment
imposes the additional tax for an additional three years at the rate of
14 percent (for taxable years beginning before 2021).
Sections 5, 12 and 13 of the bill amend section 11-604(1)(E) of the
Administrative Code, Chapter 884 of the Laws of 1975 and Chapter 882 of
the Laws of 1977, relating to the City general corporation tax. The
current tax rate is the greater of 8.85 percent on income, 1.5 mills on
business and investment capital, 8.85 percent of 15 percent of income
plus the amount of salaries and other compensation paid to any person
who at any time during the taxable year owned more than 5 percent of the
taxpayer's capital stock or a minimum tax based on the amount of New
York city receipts. There is also a 0.75 mill tax on subsidiary capital.
(On January.1, 2018, the rates are scheduled to drop to 6.7 percent, 1
mill, 6.7 percent and $25, respectively, and current rates until Decem-
ber 31, 2020.
Section 9 of the bill amends Administrative Code section 11-2002(a),
relating to the 4.5 percent sales tax on beauty and barbering services.
The amendment imposes the tax for an additional three years (until
November 30, 2020). (Tax Law section 1212-A(a)(2) authorizes the City to
impose a sales tax on beauty and barbering services.)
Section 11 of the bill amends Chapter 877 of the laws of 1975, relating
to the New York City cigarette tax. The current cigarette tax rate is 75
cents for each ten cigarettes, but is set to decline to between 2 and 4
cents for each ten cigarettes, depending on tar and nicotine content, as
of January 1, 2018. The amendment extends the existing rate of tax for
an additional three years (until December 31, 2020).
Section 14 of the bill provides that it shall take effect immediately.
REASONS FOR SUPPORT:
The various taxes in this bill, including the Personal Income Tax
("PIT") rates that New York City seeks to extend, are all important
components of the City's tax base and a critical source of vital reven-
ue. It is estimated that the extension of these taxes and rates will
continue to generate $7 billion in revenue annually.
This revenue supports vital municipal services such as police and fire
protection, education, programs for youth and seniors, parks and health
care. In addition, the PIT is a vital component of the City's municipal
debt service program that funds improvements to buildings and infras-
tructure throughout the City.
The PIT and the other taxes featured in this legislation are important
to the daily functioning of New York City. Most of these taxes have been
in effect since the 1970s and have become an accepted part of the City's
tax structure. These taxes have been extended periodically, most recent-
ly by Chapter 338 of the Laws of 2014.
