Places a limit on the personal income tax levy by New York state.

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S6122-2011 Actions

• Jan 4, 2012: REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS

S6122-2011 Memo

BILL NUMBER:S6122

TITLE OF BILL:
An act to amend the tax law, in relation to placing a limit upon the
personal income tax by the state of New York

PURPOSE:
This bill imposes a cap on the levy collected by the personal income
tax by New York State. In the event the cap is exceeded, rebate checks
will be mailed to all New York taxpayers. This bill seeks to prevents
any future tax levy increases over a certain allowable growth factor
while making New York's income tax system more progressive over time.

SUMMARY OF PROVISIONS:
Section 1 establishes a cap on the levy of the personal income tax and
establishes a rebate check program if receipts exceed this levy cap.

JUSTIFICATION:
In New York income taxes account for more revenue than any other type
of tax. At the same time, the income tax is one of the most burdensome
taxes. It takes money directly out of consumers paychecks,
disincentivizing work and reducing consumption.

The average New Yorker pays far too much in income taxes. It is no
accident that New York State has lagged in job creation and been a
leader in out of state migration, while zero income tax states like
Texas and Florida have seen an influx of both businesses and
individuals. This bill seeks to prevent further increases to New York
State's income taxes by capping the total income tax levy at the
2012-13 fiscal year amount plus a growth factor.

Importantly, this growth factor is a value that is historically
smaller than the increase in total income from state taxpayers. This
will result in income taxes consuming less and less as a percentage of
the New York economy every year. With incomes rising faster than the
rate of inflation, this bill will provide the impetus for government
to reduce tax rates every year in order to stay under the cap.

If, however, no agreement to reduce tax rates are made during a given
year, this bill automatically makes the income tax code more
progressive by providing a rebate to each taxpayer of an equal amount,
up to the amount they paid in taxes, for the total amount of income
tax revenue in excess of the cap. If a taxpayer making $40,000
receives a $500 tax rebate, a taxpayer making $40,000,000 would
receive the same $500 tax rebate. In the absence of other reform, this
bill does not create a tax cut for just the wealthy or just the middle
class, but instead an equal tax rebate for all taxpayers.

This bill will send the signal that New York is committed to
controlling the growth of its income tax and will not use reform of
the tax code to disguise a net tax increase. Small businesses, many of
which are subject to the income tax, need certainty to make
intelligent investments in personnel and equipment. This bill will
give them confidence that New York will not change the economic rules
on small businesses year to year.


This bill will also ensure that all New Yorkers will share in the
prosperity as incomes grow. As the number of individuals making high
incomes increases, all taxpayers will see their yearly rebate checks
grow.

LEGISLATIVE HISTORY:
New Bill.

EFFECTIVE DATE:
This act shall take effect immediately.

S6122-2011 Text

                      S T A T E   O F   N E W   Y O R K
  ________________________________________________________________________

                                    6122

                              I N  SENATE

                                 (PREFILED)

                               January 4, 2012
                                 ___________

  Introduced  by Sen. GALLIVAN -- read twice and ordered printed, and when
    printed to be committed to the Committee on Investigations and Govern-
    ment Operations

  AN ACT to amend the tax law, in relation to placing  a  limit  upon  the
    personal income tax by the state of New York

    THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
  BLY, DO ENACT AS FOLLOWS:


    Section 1.  The tax law is amended by adding a new section 608 to read
  as follows:

    S 608. LIMIT UPON THE PERSONAL INCOME TAX LEVY BY  THE  STATE  OF  NEW
  YORK.
    1.  UNLESS  OTHERWISE  PROVIDED  BY LAW, THE AMOUNT OF PERSONAL INCOME
  TAXES THAT MAY BE LEVIED BY OR ON BEHALF OF THE STATE OF NEW YORK  SHALL
  NOT EXCEED THE TAX LEVY LIMIT ESTABLISHED PURSUANT TO THIS SECTION.
    2. WHEN USED IN THIS SECTION:

    (A)  "ALLOWABLE  LEVY  GROWTH  FACTOR" FOR ALL FISCAL YEARS THAT BEGIN
  AFTER TWO THOUSAND TWELVE SHALL BE  THE  HIGHER  OF:  (I)  ONE  AND  TWO
  ONE-HUNDREDTHS;  OR  (II) THE SUM OF NINETY-NINE ONE-HUNDREDTHS PLUS THE
  INFLATION FACTOR.
    (B) "AVAILABLE CARRYOVER" MEANS THE AMOUNT BY WHICH THE TAX  LEVY  FOR
  THE PRIOR FISCAL YEAR WAS BELOW THE TAX LEVY LIMIT FOR SUCH FISCAL YEAR,
  IF  ANY, BUT NO MORE THAN AN AMOUNT THAT EQUALS ONE AND ONE-HALF PERCENT
  OF THE TAX LEVY LIMIT FOR SUCH FISCAL YEAR.
    (C) "COMING FISCAL YEAR" MEANS THE FISCAL YEAR OF THE STATE GOVERNMENT
  FOR WHICH A TAX LEVY LIMIT SHALL BE DETERMINED PURSUANT TO THIS SECTION.
    (D) "INFLATION FACTOR" MEANS THE QUOTIENT OF: (I) THE AVERAGE  OF  THE
  NATIONAL  CONSUMER PRICE INDEXES DETERMINED BY THE UNITED STATES DEPART-
  MENT OF LABOR FOR THE TWELVE-MONTH PERIOD ENDING SIX MONTHS PRIOR TO THE
  START OF THE COMING FISCAL  YEAR  MINUS  THE  AVERAGE  OF  THE  NATIONAL
  CONSUMER  PRICE  INDEXES  DETERMINED  BY THE UNITED STATES DEPARTMENT OF
  LABOR FOR THE TWELVE-MONTH PERIOD ENDING SIX MONTHS PRIOR TO  THE  START
  OF  THE  PRIOR FISCAL YEAR, DIVIDED BY: (II) THE AVERAGE OF THE NATIONAL
  CONSUMER PRICE INDEXES DETERMINED BY THE  UNITED  STATES  DEPARTMENT  OF

   EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                        [ ] is old law to be omitted.
                                                             LBD13844-01-2

 S. 6122                             2

  LABOR  FOR  THE TWELVE-MONTH PERIOD ENDING SIX MONTHS PRIOR TO THE START
  OF THE PRIOR FISCAL YEAR, WITH THE RESULT EXPRESSED AS A DECIMAL TO FOUR
  PLACES.
    (E) "PRIOR FISCAL YEAR" MEANS THE FISCAL YEAR OF THE STATE IMMEDIATELY
  PRECEDING THE COMING FISCAL YEAR.
    (F) "TAX LEVY LIMIT" MEANS THE AMOUNT OF TAXES AUTHORIZED TO BE LEVIED
  BY  OR  ON BEHALF OF THE STATE PURSUANT TO THIS SECTION FOR FISCAL YEARS
  BEGINNING AFTER TWO THOUSAND TWELVE.
    (G) "TAX" OR "TAXES" MEANS PERSONAL  INCOME  TAXES  LEVIED  BY  OR  ON
  BEHALF OF THE STATE.
    3.  (A) SUBJECT TO THE PROVISIONS OF SUBDIVISION FIVE OF THIS SECTION,
  BEGINNING WITH THE FISCAL YEAR THAT BEGINS AFTER  TWO  THOUSAND  TWELVE,
  THE  STATE  SHALL  NOT  ADOPT  A BUDGET THAT REQUIRES A TAX LEVY THAT IS
  GREATER THAN THE TAX LEVY LIMIT FOR THE COMING FISCAL YEAR.
    (B) THE STATE SHALL CALCULATE THE TAX LEVY  LIMIT  APPLICABLE  TO  THE
  COMING FISCAL YEAR WHICH SHALL BE DETERMINED AS FOLLOWS:

    (I)  ASCERTAIN  THE  TOTAL AMOUNT OF TAXES LEVIED FOR THE PRIOR FISCAL
  YEAR.
    (II) MULTIPLY THE RESULT BY THE ALLOWABLE LEVY GROWTH FACTOR.
    (III) ADD THE AVAILABLE CARRYOVER, IF ANY.
    4. IN THE EVENT THE STATE'S ACTUAL TAX LEVY FOR A  GIVEN  FISCAL  YEAR
  EXCEEDS  THE  TAX  LEVY  LIMIT  BY MORE THAN ONE PERCENT OF THE TAX LEVY
  LIMIT, THE STATE SHALL REBATE THE TOTAL AMOUNT THAT THE ACTUAL TAX  LEVY
  EXCEEDS  THE  TAX  LEVY  LIMIT  SO THAT EACH INDIVIDUAL FILER RECEIVES A
  REBATE OF EQUAL AMOUNT ROUNDED DOWN TO THE NEAREST CENT,  PROVIDED  THAT
  NO INDIVIDUAL SHALL RECEIVE A REBATE OF A GREATER AMOUNT THAN THE INCOME
  TAXES  PAID  DURING THE SAME FISCAL YEAR.  THESE REBATES SHALL BE MAILED
  IN THE FORM OF CHECKS PAYABLE TO THE FILING INDIVIDUAL NO LATER THAN THE
  FIRST OF SEPTEMBER FOLLOWING THE END OF EACH FISCAL YEAR.
    5. IN THE EVENT THE STATE'S ACTUAL TAX LEVY FOR A  GIVEN  FISCAL  YEAR
  EXCEEDS  THE  TAX  LEVY LIMIT AS ESTABLISHED PURSUANT TO THIS SECTION BY
  LESS THAN ONE PERCENT OF THE TAX LEVY LIMIT, THE STATE SHALL  PLACE  THE
  EXCESS  AMOUNT  OF  THE LEVY IN RESERVE IN ACCORDANCE WITH SUCH REQUIRE-
  MENTS AS THE STATE COMPTROLLER MAY PRESCRIBE, AND SHALL USE  SUCH  FUNDS
  AND  ANY  INTEREST EARNED THEREON TO OFFSET THE TAX LEVY FOR THE ENSUING
  FISCAL YEAR.
    S 2. This act shall take effect immediately.