This bill has been amended

Bill S3266-2013

Creates the middle class circuit breaker tax credit and a tax reform study commission

Creates the middle class circuit breaker tax credit and a tax reform study commission.

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  • Jan 8, 2014: REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • Jan 31, 2013: REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS

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BILL NUMBER:S3266

TITLE OF BILL: An act to amend the tax law, in relation to creating the middle class circuit breaker tax credit and creating a tax reform study commission

PURPOSE OR GENERAL IDEA OF BILL: To provide a personal income tax credit for certain property taxpayers who pay a disproportionate share of their income to property taxes.

SUMMARY OF SPECIFIC PROVISIONS: SECTION 1: Adds a new subsection (vv) to section 606 of the tax law to provide for a real property tax credit. The credit will be based on the income of the household and the percentage that said household pays for real property taxes.

FOR HOMEOWNERS

For taxable years starting in 2014: Household Adjusted Gross Income Tax Maximum Real Property Tax

$100,000 or less Real Property taxes paid in excess of 9% of said income can receive a personal income tax credit of 70% of the overage.

$100,001 + No credit.

For taxable years starting in 2014: Household Adjusted Gross Income Tax Maximum Real Property Tax

$100,000 or less Real Property taxes paid in excess of 8.5% of said income can receive a personal income tax credit of 70% of the overage.

$100,001 + No credit.

For taxable years starting in 2015: Household Adjusted Gross Income Tax Maximum Real Property Tax

$100,000 or less Real Property taxes paid in excess of 7.5% of said income can receive a personal income tax credit of 70% of the overage.

$100,001 - $150,000 Real Property taxes paid in excess of 7.5% of the first $100,000 of said income PLUS 8.5% of said income above

$100,000 can receive a personal income tax credit of 70% of the overage.

$150,001 + No credit. For taxable years starting in 2016: Household Adjusted Gross Income Tax Maximum Real Property Tax

$100,000 or less Real Property taxes paid in excess of 6% of said income can receive a personal income tax credit of 70% of the overage.

$100,001 - $150,000 Real Property taxes paid in excess of 6% if the first $100,000 of said income PLUS 7% of said income above $100,000 can receive a personal income tax credit of 70% of of the overage.

$150,001 - $250,000 Real Property taxes paid in excess of 6% of the first $100,000 of said income PLUS 7% of the next $50,000 of said income PLUS 8.5% of said income above $150,000 can receive a personal income tax credit of 70% of the overage.

$250,000 + No credit.

To qualify, the taxpayer must have resided in the home for not less than five years. Also, the taxpayer may still benefit from the Basic STAR exemption or the Enhanced STAR exemption for senior citizens. The credit will equal seventy percent of the taxes paid over the allowed percentage cap as provided in the bill.

The act would also provide for a "real property tax equivalent" in the case of taxpayers who rent real property as their primary New York State residence.

For taxable years starting in 2014 the "real property tax equivalent" equal to 15% of the adjusted rent actually paid in the taxable year. taxable years starting in 2016, the amount is increased to 20% of the adjusted rent actually paid in the taxable year.

SECTION 2: Creates a tax reform study commission with appointments from the Senate, Assembly and the Executive. The commission will review the state's existing property tax reform programs as well as programs enacted in other states.

SECTION 3: Contains the effective date.

JUSTIFICATION: The middle class property tax circuit breaker program is a concept that has successfully been used in several states to Provide relief from a residential homeowner's property tax when it exceeds a certain portion of their household income. It has been traditionally Used for homeowners with very low incomes and low assessments. New York State currently has a circuit breaker provision that has existed for decades, but the maximum eligible household income is $18,000 and the maximum eligible home value is $85,000. This new program would target middle-class New Yorkers who have financially suffered as municipalities have had to rely more heavily on real property taxes for local government revenue. Many homeowners are facing sky-racking real property tax bills as a result they are often faced with the serious threat of defaulting on their property taxes and/or seriously consider selling their homes.

Critics of the New York's STAR program have claimed that it is inequitable because it does not draw a connection between a taxpayer's household income and the amount of his tax bill. The Middle Class STAR Rebate Checks program, which began in 1970 and was eliminated in 2009, compounded this effect because it calculated a household's rebate amount as a percentage of the value of its STAR exemption. This legislation seeks to resolve these limitations and remain sensitive to the State's current financial crisis. Additionally, the bill would add progressivity to property tax relief and extend the benefits to property renters who are often burdened with property taxes in the cost of their rent. The bill is phased in over four years in order to take the state's fiscal situation into consideration while ensuring that the most overburdened property taxpayers, based on the percentage of income they are paying in property tax on their home, will get relief quickly.

FISCAL IMPLICATIONS: The program is phased in over four years and will cost the State nothing in the first year. For year two the cost will be $1.1 billion; year three will cost $1.8 billion and every year after will cost $2.3 billion.

EFFECTIVE DATE: Immediately after enactment.


Text

STATE OF NEW YORK ________________________________________________________________________ 3266 2013-2014 Regular Sessions IN SENATE January 31, 2013 ___________
Introduced by Sens. KRUEGER, MONTGOMERY -- read twice and ordered print- ed, and when printed to be committed to the Committee on Investi- gations and Government Operations AN ACT to amend the tax law, in relation to creating the middle class circuit breaker tax credit and creating a tax reform study commission THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Section 606 of the tax law is amended by adding a new subsection (vv) to read as follows: (VV) MIDDLE CLASS CIRCUIT BREAKER CREDIT. (1) DEFINITIONS. FOR THE PURPOSES OF THIS SUBSECTION: (A) "QUALIFIED TAXPAYER" MEANS A RESIDENT INDIVIDUAL OF THE STATE WHO OWNS OR RENTS THE RESIDENTIAL REAL PROPERTY IN WHICH HE OR SHE RESIDES, AND HAS RESIDED IN SUCH RESIDENTIAL REAL PROPERTY FOR NOT LESS THAN FIVE YEARS. (B) "HOUSEHOLD" OR "MEMBERS OF THE HOUSEHOLD" MEANS A QUALIFIED TAXPAYER OR QUALIFIED TAXPAYERS AND ALL OTHER PERSONS, NOT NECESSARILY RELATED, WHO ALL RESIDE IN THE RESIDENTIAL REAL PROPERTY OWNED BY THE TAXPAYER OR TAXPAYERS, AND SHARE ITS FURNISHINGS, FACILITIES AND ACCOM- MODATIONS; PROVIDED THAT NO PERSON MAY BE A MEMBER OF MORE THAN ONE HOUSEHOLD AT ONE TIME. (C) "HOUSEHOLD GROSS INCOME" MEANS THE AGGREGATE ADJUSTED GROSS INCOME OF ALL MEMBERS OF THE HOUSEHOLD FOR THE TAXABLE YEAR AS REPORTED FOR FEDERAL INCOME TAX PURPOSES, OR WHICH WOULD BE REPORTED AS ADJUSTED GROSS INCOME IF A FEDERAL INCOME TAX RETURN WERE REQUIRED TO BE FILED, WITH THE MODIFICATIONS IN SUBSECTION (B) OF SECTION SIX HUNDRED TWELVE OF THIS ARTICLE BUT WITHOUT THE MODIFICATIONS IN SUBSECTION (C) OF SUCH SECTION, PLUS ANY PORTION OF THE GAIN FROM THE SALE OR EXCHANGE OF PROP- ERTY OTHERWISE EXCLUDED FROM SUCH AMOUNT; EARNED INCOME FROM SOURCES WITHOUT THE UNITED STATES EXCLUDABLE FROM FEDERAL GROSS INCOME BY SECTION NINE HUNDRED ELEVEN OF THE INTERNAL REVENUE CODE; SUPPORT MONEY
NOT INCLUDED IN ADJUSTED GROSS INCOME; NONTAXABLE STRIKE BENEFITS; SUPPLEMENTAL SECURITY INCOME PAYMENTS; THE GROSS AMOUNT OF ANY PENSION OR ANNUITY BENEFITS TO THE EXTENT NOT INCLUDED IN SUCH ADJUSTED GROSS INCOME (INCLUDING, BUT NOT LIMITED TO, RAILROAD RETIREMENT BENEFITS AND ALL PAYMENTS RECEIVED UNDER THE FEDERAL SOCIAL SECURITY ACT AND VETER- ANS' DISABILITY PENSIONS); NONTAXABLE INTEREST RECEIVED FROM THE STATE OF NEW YORK, ITS AGENCIES, INSTRUMENTALITIES, PUBLIC CORPORATIONS, OR POLITICAL SUBDIVISIONS (INCLUDING A PUBLIC CORPORATION CREATED PURSUANT TO AGREEMENT OR COMPACT WITH ANOTHER STATE OR CANADA); WORKERS' COMPEN- SATION; THE GROSS AMOUNT OF "LOSS-OF-TIME" INSURANCE; AND THE AMOUNT OF CASH PUBLIC ASSISTANCE AND RELIEF, OTHER THAN MEDICAL ASSISTANCE FOR THE NEEDY, PAID TO OR FOR THE BENEFIT OF THE QUALIFIED TAXPAYER OR MEMBERS OF HIS OR HER HOUSEHOLD. HOUSEHOLD GROSS INCOME SHALL NOT INCLUDE SURPLUS FOODS OR OTHER RELIEF IN KIND OR PAYMENTS MADE TO INDIVIDUALS BECAUSE OF THEIR STATUS AS VICTIMS OF NAZI PERSECUTION AS DEFINED IN PUBLIC LAW 103-286 OR ANY DISABILITY COMPENSATION RECEIVED BY VETERANS ON ACCOUNT OF INJURY OR ILLNESS INCURRED OR AGGRAVATED DURING MILITARY SERVICE IN THE WARS IN AFGHANISTAN AND IRAQ SINCE SEPTEMBER ELEVENTH, TWO THOUSAND ONE. PROVIDED, FURTHER, HOUSEHOLD GROSS INCOME SHALL ONLY INCLUDE ALL SUCH INCOME RECEIVED BY ALL MEMBERS OF THE HOUSEHOLD WHILE MEMBERS OF SUCH HOUSEHOLD. (D) "ADJUSTED RENT" MEANS RENT PAID FOR THE RIGHT OF OCCUPANCY OF A RESIDENCE. (E) "REAL PROPERTY TAX EQUIVALENT" MEANS (1) FOR TAXABLE YEARS BEGIN- NING IN TWO THOUSAND FOURTEEN, FIFTEEN PERCENT OF THE ADJUSTED RENT ACTUALLY PAID IN THE TAXABLE YEAR BY A HOUSEHOLD SOLELY FOR THE RIGHT OF OCCUPANCY OF ITS NEW YORK RESIDENCE FOR THE TAXABLE YEAR. IF (I) A RESI- DENCE IS RENTED TO TWO OR MORE INDIVIDUALS AS COTENANTS, OR SUCH INDI- VIDUALS SHARE IN THE PAYMENT OF A SINGLE RENT FOR THE RIGHT OF OCCUPANCY OF SUCH RESIDENCE, AND (II) EACH OF SUCH INDIVIDUALS IS A MEMBER OF A DIFFERENT HOUSEHOLD, ONE OR MORE OF WHICH INDIVIDUALS SHARES SUCH RESI- DENCE, REAL PROPERTY TAX EQUIVALENT IS THAT PORTION OF FIFTEEN PERCENT OF THE ADJUSTED RENT PAID IN THE TAXABLE YEAR WHICH REFLECTS THAT PORTION OF THE RENT ATTRIBUTABLE TO THE QUALIFIED TAXPAYER AND THE MEMBERS OF HIS OR HER HOUSEHOLD; AND (2) FOR TAXABLE YEARS BEGINNING IN TWO THOUSAND SIXTEEN AND THEREAFTER, TWENTY PERCENT OF THE ADJUSTED RENT ACTUALLY PAID IN THE TAXABLE YEAR BY A HOUSEHOLD SOLELY FOR THE RIGHT OF OCCUPANCY OF ITS NEW YORK RESIDENCE FOR THE TAXABLE YEAR. IF (I) A RESIDENCE IS RENTED TO TWO OR MORE INDIVIDUALS AS COTENANTS, OR SUCH INDIVIDUALS SHARE IN THE PAYMENT OF A SINGLE RENT FOR THE RIGHT OF OCCU- PANCY OF SUCH RESIDENCE, AND (II) EACH OF SUCH INDIVIDUALS IS A MEMBER OF A DIFFERENT HOUSEHOLD, ONE OR MORE OF WHICH INDIVIDUALS SHARES SUCH RESIDENCE, REAL PROPERTY TAX EQUIVALENT IS THAT PORTION OF TWENTY PERCENT OF THE ADJUSTED RENT PAID IN THE TAXABLE YEAR WHICH REFLECTS THAT PORTION OF THE RENT ATTRIBUTABLE TO THE QUALIFIED TAXPAYER AND THE MEMBERS OF HIS OR HER HOUSEHOLD. (F) "NET REAL PROPERTY TAX" MEANS THE REAL PROPERTY TAXES ASSESSED ON THE RESIDENTIAL REAL PROPERTY OWNED AND OCCUPIED BY THE TAXPAYER OR TAXPAYERS AFTER ANY EXEMPTION OR ABATEMENT RECEIVED PURSUANT TO THE REAL PROPERTY TAX LAW. (2) CREDIT. A QUALIFIED TAXPAYER SHALL BE ALLOWED A CREDIT AGAINST THE TAXES IMPOSED BY THIS ARTICLE, EQUAL TO SEVENTY PERCENT OF THE AMOUNT BY WHICH THE TAXPAYER'S NET REAL PROPERTY TAX OR THE TAXPAYER'S REAL PROP- ERTY TAX EQUIVALENT EXCEEDS THE TAXPAYER'S MAXIMUM REAL PROPERTY TAX, AS DETERMINED BY PARAGRAPH THREE OF THIS SUBSECTION. IF SUCH CREDIT EXCEEDS THE TAX FOR SUCH TAXABLE YEAR, AS REDUCED BY THE OTHER CREDITS PERMITTED
BY THIS ARTICLE, THE QUALIFIED TAXPAYER MAY RECEIVE, AND THE COMP- TROLLER, SUBJECT TO A CERTIFICATE OF THE DEPARTMENT, SHALL PAY AS AN OVERPAYMENT, WITHOUT INTEREST, ANY EXCESS BETWEEN SUCH TAX AS SO REDUCED AND THE AMOUNT OF THE CREDIT. IF A QUALIFIED TAXPAYER IS NOT REQUIRED TO FILE A RETURN PURSUANT TO SECTION SIX HUNDRED FIFTY-ONE OF THIS ARTICLE, A QUALIFIED TAXPAYER MAY NEVERTHELESS RECEIVE AND THE COMPTROLLER, SUBJECT TO A CERTIFICATE OF THE DEPARTMENT, SHALL PAY AS AN OVERPAYMENT THE FULL AMOUNT OF THE CREDIT, WITHOUT INTEREST. (3) MAXIMUM REAL PROPERTY TAX. (A) A QUALIFIED TAXPAYER'S MAXIMUM REAL PROPERTY TAX SHALL BE DETERMINED AS FOLLOWS: (I) FOR TAX YEARS BEGINNING IN TWO THOUSAND FOURTEEN: HOUSEHOLD GROSS INCOME MAXIMUM REAL PROPERTY TAX ONE HUNDRED THOUSAND NINE PERCENT OF THE DOLLARS OR LESS HOUSEHOLD GROSS INCOME MORE THAN ONE HUNDRED NO LIMITATION. THOUSAND DOLLARS (II) FOR TAX YEARS BEGINNING IN TWO THOUSAND FIFTEEN: HOUSEHOLD GROSS INCOME MAXIMUM REAL PROPERTY TAX ONE HUNDRED THOUSAND EIGHT AND ONE-HALF PERCENT OF THE DOLLARS OR LESS HOUSEHOLD GROSS INCOME MORE THAN ONE HUNDRED NO LIMITATION. THOUSAND DOLLARS (III) FOR TAX YEARS BEGINNING IN TWO THOUSAND SIXTEEN: HOUSEHOLD GROSS INCOME MAXIMUM REAL PROPERTY TAX ONE HUNDRED THOUSAND DOLLARS SEVEN AND ONE-HALF PERCENT OF OR LESS HOUSEHOLD GROSS INCOME MORE THAN ONE HUNDRED THOUSAND SEVEN AND ONE-HALF PERCENT OF DOLLARS, BUT LESS THAN OR EQUAL TO ONE HUNDRED THOUSAND DOLLARS ONE HUNDRED FIFTY THOUSAND DOLLARS PLUS EIGHT AND ONE-HALF PERCENT OF HOUSEHOLD GROSS INCOME ABOVE ONE HUNDRED THOUSAND DOLLARS MORE THAN ONE HUNDRED FIFTY NO LIMITATION. THOUSAND DOLLARS (IV) FOR TAX YEARS BEGINNING IN TWO THOUSAND SEVENTEEN AND THEREAFTER: HOUSEHOLD GROSS INCOME MAXIMUM REAL PROPERTY TAX ONE HUNDRED THOUSAND SIX PERCENT OF HOUSEHOLD GROSS DOLLARS OR LESS INCOME MORE THAN ONE HUNDRED THOUSAND SIX PERCENT OF ONE HUNDRED DOLLARS, BUT LESS THAN OR EQUAL TO THOUSAND DOLLARS PLUS SEVEN ONE HUNDRED FIFTY THOUSAND DOLLARS PERCENT OF HOUSEHOLD GROSS INCOME ABOVE ONE HUNDRED THOUSAND DOLLARS MORE THAN ONE HUNDRED FIFTY SIX PERCENT OF ONE HUNDRED THOUSAND THOUSAND DOLLARS, BUT LESS THAN DOLLARS PLUS SEVEN OR EQUAL TO TWO HUNDRED FIFTY PERCENT OF FIFTY THOUSAND DOLLARS THOUSAND DOLLARS PLUS EIGHT AND ONE-HALF PERCENT OF HOUSEHOLD GROSS INCOME ABOVE ONE HUNDRED FIFTY THOUSAND DOLLARS MORE THAN TWO HUNDRED FIFTY NO LIMITATION. THOUSAND DOLLARS (B) THE THRESHOLDS OF HOUSEHOLD GROSS INCOME ESTABLISHED BY CLAUSE (IV) OF SUBPARAGRAPH (A) OF THIS PARAGRAPH SHALL BE INDEXED FOR INFLATION FOR TAX YEARS BEGINNING IN TWO THOUSAND EIGHTEEN AND THEREAFT- ER.
(4) EXCLUSIONS FROM ELIGIBILITY. NO CREDIT SHALL BE GRANTED UNDER THIS SUBSECTION IF THE QUALIFIED TAXPAYER CLAIMS THE REAL PROPERTY TAX CIRCUIT BREAKER CREDIT, PURSUANT TO SUBSECTION (E) OF THIS SECTION, DURING THE TAXABLE YEAR. S 2. There is hereby established a tax reform study commission to provide the governor and the legislature with a long run plan for reforming the state and local tax systems. The tax reform study commis- sion shall consist of five members appointed by the governor, four members each appointed by the speaker of the assembly and the temporary president of the senate, and one member each appointed by the minority leader of the senate and the minority leader of the assembly. In addi- tion, on or before January 1, 2016, the tax reform study commission shall provide the governor and the legislature with recommendations on any changes that should be made in the definitions of income used in the various property tax relief programs authorized by the laws of the state of New York. Such recommendations shall be based on an examination of such laws and of such laws in other states. In preparing such recommen- dations, the tax reform study commission shall review the distributional impact of the items of income included in the definition of household income for purposes of the circuit breaker and other property tax relief programs established by state law and make recommendations to the gover- nor and the legislature for any changes in any of these definitions that the tax reform study commission deems appropriate. The commissioner of taxation and finance and the director of the office of real property services shall provide the tax reform study commission with such data and analysis as it may require. S 3. This act shall take effect immediately.

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