NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A9462
SPONSOR: Silver (MS)
 
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 12 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, 2014. The Tax Law amendment authorizes the City
to impose the tax for an additional three years (until November 30,
2017). The Administrative Code amendment imposes the tax for an addi-
tional three years (until November 30, 2017).
Section 2 of the bill amends Tax Law section 1301(a), relating to the
tax on the personal income of residents of the City and the City minimum
income tax. 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 2018) 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 2017). The amendment of Tax Law section
1301(a)(2) authorizes the City to impose the minimum income tax for an
additional three years (for taxable years beginning before 2018).
Section 7 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 2018)
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 2017).
Sections 3 and 9 of the bill amend Tax Law section 1301-A(a) and Admin-
istrative Code section 11-1702, relating to the City minimum income tax.
The Tax Law amendment extends the authority of the City to impose the
minimum income tax at 2.85 percent for an additional three years (for
taxable years beginning before 2018). (The rate is scheduled to fall to
2.5 percent beginning in 2015.) The Administrative Code amendment
imposes the minimum tax at the existing rate of 2.85 percent for an
additional three years (for taxable years beginning before 2018).
Sections 4 and 8 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 2017).
Sections 5 and 10 of the bill amend Tax Law section 1304-B(a) and Admin-
istrative Code section 11-1704.1(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 2018) and extends the
authority of the City to reduce the additional tax by local law for
taxable years beginning before 2018. The Administrative Code amendment
imposes the additional tax for an additional three years at the rate of
14 percent (for taxable years beginning before 2018).
Sections 6, 14 and 15 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, 2015, the rates are scheduled to drop to 6.7 percent, 1
mill, 6.7 percent and $25, respectively, and .5 mill on subsidiary capi-
tal.) The amendments will continue the current rates until December 31,
2017.
Section 11 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, 2017). (Tax Law section 1212-A(a)(2) authorizes the City to
impose a sales tax on beauty and barbering services.)
Section 13 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, 2015. The amendment extends the existing rate of tax for
an additional three years (until December 31, 2017).
Section 16 of the bill provides that it shall take effect immediately.
 
REASONS FOR SUPPORT: Most of the taxes that are extended by this
legislation have been in effect for nearly forty years and as such have
become an accepted and expected part of the City's tax and budgeting
structure. The $7 billion in annual revenue (beginning in City Fiscal
Year 2016) at stake in this legislation is a large percentage of the
support necessary for critical municipal services, such as the core
public safety functions performed by the City's police and fire depart-
ments. It is, therefore, of crucial importance that the revenue gener-
ated by these taxes will continue into the foreseeable future.
In the event that these taxes were allowed to expire, the effect of the
loss of such revenue would be nothing short of devastating to the City's
budget and the City's ability to provide basic services to its residents
- a citizenry which comprises over 42% of the total population of the
State of New York. It is important to note that these taxes have been
regularly extended, most recently by Chapter 209 of the Laws of 2011.