Places a limit on the personal income tax levy by New York state.
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: 2011-12: S.6122 Referred to Investigations & Government Operations
EFFECTIVE DATE: This act shall take effect immediately.
STATE OF NEW YORK ________________________________________________________________________ 152 2013-2014 Regular Sessions IN SENATE (PREFILED) January 9, 2013 ___________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 THIRTEEN 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 OFEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD01978-01-3 S. 152 2
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 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 THIRTEEN. (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 THIRTEEN, 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.