Bill S540-2009

Relates to tax table benefit recapture; repealer

Raises the cap on income levels triggering the supplemental tax in an effort to decrease the tax burden on joint filers and heads-of-households.

Details

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  • Jan 6, 2010: REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • Jan 7, 2009: REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS

Memo

 BILL NUMBER:  S540

TITLE OF BILL : An act to amend the tax law, in relation to the personal income tax table benefit recapture; to repeal subsection (d) of section 601 of such law relating to personal income tax; and providing for the repeal of certain provisions upon expiration thereof

PURPOSE : This legislation would raise the cap for incomes subject to the supplemental tax.

SUMMARY OF LEGISLATION : Amends section 601(d) of the Tax Law, to alter the tax benefit recapture (or supplemental tax) to raise the income levels for different filing status using a graduated scale. The levels at which each status would proportionally lose their ability to tax their incomes at lower rates is changed from between $100,000 to $150,000 for everyone, to $125,000 to $175,000 for heads of households and $150,000 to $200,000 for married-joint filers. Single individuals would use the existing schedule of $100,000 to $150,000. In addition, subsection (d-1) shall not apply to taxpayers who are small businesses as defined by the economic development law and whose gross receipts or sales from their business are greater than $10,000.

EXISTING LAW : Currently, personal income tax payers that have adjusted gross income (AGD between $100,000 and $150,000 proportionally lose the benefit of having their income below $20,000 (single), $30,000 (head of household), or $40,000 (married~joint) taxed at a lower rate. Taxpayers with an AGl of $150,000 or above, lose this benefit completely and all of their income is taxed at the highest rate.

JUSTIFICATION : The average income of families has increased over the last several years. More and more middle class citizens are finding themselves in the "highest" tax bracket. As a result more and more working families are subject to the supplemental tax, increasing their overall tax liability.

The tax benefit recapture (or supplemental tax) was enacted in 1991. It has never been indexed for inflation, nor does it utilize a graduated scale for different tax filing status (single, head-of-household, married-joint). Therefore, an individual with no dependents making $100,000 is currently treated the same as a family of four with two incomes making $100,000 combined. This section of the tax law has in fact operated as a marriage penalty, further inhibiting the desires of young working families desire to live and raise their families in New York.

Thus, this legislation would raise the cap on income levels triggering the supplemental tax in an effort to decrease the tax burden on joint filers and heads-of-households.

LEGISLATIVE HISTORY : 2007- Passed Senate; 2008 -Finance

FISCAL IMPLICATIONS : To be determined.

EFFECTIVE DATE : This act shall take effect immediately and shall apply to taxable years starting on or after January 1, 2010; provided, however that section two of this act shall expire and be deem repealed January 1, 2013 and section three of this act shall take effect January 1,2013.

Text

STATE OF NEW YORK ________________________________________________________________________ 540 2009-2010 Regular Sessions IN SENATE (PREFILED) January 7, 2009 ___________
Introduced by Sen. ALESI -- 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 the personal income tax table benefit recapture; to repeal subsection (d) of section 601 of such law relating to personal income tax; and providing for the repeal of certain provisions upon expiration thereof THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The opening paragraph of subsection (d) of section 601 of the tax law, as amended by section 1 of part R of chapter 63 of the laws of 2003, is amended to read as follows: For taxable years beginning after nineteen hundred ninety AND BEFORE TWO THOUSAND NINE, there is hereby imposed a supplemental tax in addi- tion to the tax imposed under subsections (a), (b) and (c) of this section for the purpose of recapturing the benefit of the tax tables contained in such subsections or section six hundred ninety-nine of this article, as the case may be. The supplemental tax shall be an amount equal to the sum of the tax table benefits in paragraphs one, two and three of this subsection multiplied by their respective fractions in such paragraphs provided, however, that paragraph two of this subsection shall not apply to taxpayers that are not subject to the second highest rate of tax. S 2. Section 601 of the tax law is amended by adding three new subsections (d-1), (d-2) and (d-3) to read as follows: (D-1) TAX TABLE BENEFIT RECAPTURE. FOR TAXABLE YEARS BEGINNING ON AND AFTER JANUARY FIRST, TWO THOUSAND TEN AND BEFORE JANUARY FIRST, TWO THOUSAND ELEVEN, THERE IS HEREBY IMPOSED A SUPPLEMENTAL TAX IN ADDITION TO THE TAX IMPOSED UNDER SUBSECTIONS (A), (B) AND (C) OF THIS SECTION FOR THE PURPOSE OF RECAPTURING THE BENEFIT OF THE TAX TABLES CONTAINED
IN SUCH SUBSECTIONS OR SECTION SIX HUNDRED NINETY-NINE OF THIS ARTICLE, AS THE CASE MAY BE. PROVIDED, HOWEVER, THIS SUBSECTION SHALL NOT APPLY TO TAXPAYERS WHO ARE SMALL BUSINESSES AS DEFINED IN SECTION ONE HUNDRED THIRTY-ONE OF THE ECONOMIC DEVELOPMENT LAW AND WHOSE GROSS RECEIPTS OR SALES FROM THEIR TRADE OR BUSINESS ARE GREATER THAN TEN THOUSAND DOLLARS. THE SUPPLEMENTAL TAX SHALL BE AN AMOUNT EQUAL TO THE TAX TABLE BENEFIT MULTIPLIED BY A FRACTION. (1) RESIDENT MARRIED INDIVIDUALS FILING JOINT RETURNS AND RESIDENT SURVIVING SPOUSES. (A) THE TAX TABLE BENEFIT IS THE DIFFERENCE BETWEEN (I) THE AMOUNT OF TAXABLE INCOME SET FORTH IN THE TAX TABLE IN SUBSECTION (A) OF THIS SECTION, OR IN SECTION SIX HUNDRED NINETY-NINE OF THIS ARTICLE, AS THE CASE MAY BE, NOT SUBJECT TO THE HIGHEST RATE OF TAX FOR THE TAXABLE YEAR MULTIPLIED BY SUCH RATE AND (II) THE HIGHEST DOLLAR DENOMINATED TAX SET FORTH IN THE TAX TABLE APPLICABLE TO THE TAXABLE YEAR IN SUBSECTION (A) OF THIS SECTION OR SECTION SIX HUNDRED NINETY-NINE OF THIS ARTICLE, AS THE CASE MAY BE. (B) THE FRACTION IS COMPUTED AS FOLLOWS: THE NUMERATOR IS THE EXCESS OF NEW YORK ADJUSTED GROSS INCOME FOR THE TAXABLE YEAR OVER THE INCOME THRESHOLD. FOR THE PURPOSES OF THIS SUBPARAGRAPH, THE INCOME THRESHOLD IS EQUAL TO ONE HUNDRED FIFTY THOUSAND DOLLARS. THE DENOMINATOR IS FIFTY THOUSAND DOLLARS. PROVIDED, HOWEVER, THE FRACTION SHALL NOT BE GREATER THAN ONE. (2) RESIDENT HEADS OF HOUSEHOLDS. (A) THE TAX TABLE BENEFIT IS THE DIFFERENCE BETWEEN (I) THE AMOUNT OF TAXABLE INCOME SET FORTH IN THE TAX TABLE IN SUBSECTION (B) OF THIS SECTION, OR IN SECTION SIX HUNDRED NINE- TY-NINE OF THIS ARTICLE, AS THE CASE MAY BE, NOT SUBJECT TO THE HIGHEST RATE OF TAX FOR THE TAXABLE YEAR MULTIPLIED BY SUCH RATE AND (II) THE HIGHEST DOLLAR DENOMINATED TAX SET FORTH IN THE TAX TABLE APPLICABLE TO THE TAXABLE YEAR IN SUBSECTION (B) OF THIS SECTION OR SECTION SIX HUNDRED NINETY-NINE OF THIS ARTICLE, AS THE CASE MAY BE. (B) THE FRACTION IS COMPUTED AS FOLLOWS: THE NUMERATOR IS THE EXCESS OF NEW YORK ADJUSTED GROSS INCOME FOR THE TAXABLE YEAR OVER THE INCOME THRESHOLD. FOR THE PURPOSES OF THIS SUBPARAGRAPH, THE INCOME THRESHOLD IS EQUAL TO ONE HUNDRED TWENTY-FIVE THOUSAND DOLLARS. THE DENOMINATOR IS FIFTY THOUSAND DOLLARS. PROVIDED, HOWEVER, THE FRACTION SHALL NOT BE GREATER THAN ONE. (3) RESIDENT UNMARRIED INDIVIDUALS, RESIDENT MARRIED INDIVIDUALS FILING SEPARATE RETURNS AND RESIDENT ESTATES AND TRUSTS. (A) THE TAX TABLE BENEFIT IS THE DIFFERENCE BETWEEN (I) THE AMOUNT OF TAXABLE INCOME SET FORTH IN THE TAX TABLE IN SUBSECTION (C) OF THIS SECTION, OR IN SECTION SIX HUNDRED NINETY-NINE OF THIS ARTICLE, AS THE CASE MAY BE, NOT SUBJECT TO THE HIGHEST RATE OF TAX FOR THE TAXABLE YEAR MULTIPLIED BY SUCH RATE AND (II) THE HIGHEST DOLLAR DENOMINATED TAX SET FORTH IN THE TAX TABLE APPLICABLE TO THE TAXABLE YEAR IN SUBSECTION (C) OF THIS SECTION OR SECTION SIX HUNDRED NINETY-NINE OF THIS ARTICLE, AS THE CASE MAY BE. (B) THE FRACTION IS COMPUTED AS FOLLOWS: THE NUMERATOR IS THE EXCESS OF NEW YORK ADJUSTED GROSS INCOME FOR THE TAXABLE YEAR OVER THE INCOME THRESHOLD. FOR THE PURPOSES OF THIS SUBPARAGRAPH, THE INCOME THRESHOLD IS EQUAL TO ONE HUNDRED THOUSAND DOLLARS. THE DENOMINATOR IS FIFTY THOU- SAND DOLLARS. PROVIDED, HOWEVER, THE FRACTION SHALL NOT BE GREATER THAN ONE. (D-2) TAX TABLE BENEFIT RECAPTURE. FOR TAXABLE YEARS BEGINNING ON AND AFTER JANUARY FIRST, TWO THOUSAND ELEVEN AND BEFORE JANUARY FIRST, TWO THOUSAND TWELVE, THERE IS HEREBY IMPOSED A SUPPLEMENTAL TAX IN ADDITION TO THE TAX IMPOSED UNDER SUBSECTIONS (A), (B) AND (C) OF THIS SECTION
FOR THE PURPOSE OF RECAPTURING THE BENEFIT OF THE TAX TABLES CONTAINED IN SUCH SUBSECTIONS OR SECTION SIX HUNDRED NINETY-NINE OF THIS ARTICLE, AS THE CASE MAY BE. THE SUPPLEMENTAL TAX SHALL BE AN AMOUNT EQUAL TO THE TAX TABLE BENEFIT MULTIPLIED BY A FRACTION. (1) RESIDENT MARRIED INDIVIDUALS FILING JOINT RETURNS AND RESIDENT SURVIVING SPOUSES. (A) THE TAX TABLE BENEFIT IS THE DIFFERENCE BETWEEN (I) THE AMOUNT OF TAXABLE INCOME SET FORTH IN THE TAX TABLE IN SUBSECTION (A) OF THIS SECTION, OR IN SECTION SIX HUNDRED NINETY-NINE OF THIS ARTICLE, AS THE CASE MAY BE, NOT SUBJECT TO THE HIGHEST RATE OF TAX FOR THE TAXABLE YEAR MULTIPLIED BY SUCH RATE AND (II) THE HIGHEST DOLLAR DENOMINATED TAX SET FORTH IN THE TAX TABLE APPLICABLE TO THE TAXABLE YEAR IN SUBSECTION (A) OF THIS SECTION OR SECTION SIX HUNDRED NINETY-NINE OF THIS ARTICLE, AS THE CASE MAY BE. (B) THE FRACTION IS COMPUTED AS FOLLOWS: THE NUMERATOR IS THE EXCESS OF NEW YORK ADJUSTED GROSS INCOME FOR THE TAXABLE YEAR OVER THE INCOME THRESHOLD. FOR THE PURPOSES OF THIS SUBPARAGRAPH, THE INCOME THRESHOLD IS EQUAL TO TWO HUNDRED THOUSAND DOLLARS. THE DENOMINATOR IS FIFTY THOU- SAND DOLLARS. PROVIDED, HOWEVER, THE FRACTION SHALL NOT BE GREATER THAN ONE. (2) RESIDENT HEADS OF HOUSEHOLDS. (A) THE TAX TABLE BENEFIT IS THE DIFFERENCE BETWEEN (I) THE AMOUNT OF TAXABLE INCOME SET FORTH IN THE TAX TABLE IN SUBSECTION (B) OF THIS SECTION, OR IN SECTION SIX HUNDRED NINETY-NINE OF THIS ARTICLE, AS THE CASE MAY BE, NOT SUBJECT TO THE HIGHEST RATE OF TAX FOR THE TAXABLE YEAR MULTIPLIED BY SUCH RATE AND (II) THE HIGHEST DOLLAR DENOMINATED TAX SET FORTH IN THE TAX TABLE APPLICABLE TO THE TAXABLE YEAR IN SUBSECTION (B) OF THIS SECTION OR SECTION SIX HUNDRED NINETY-NINE OF THIS ARTICLE, AS THE CASE MAY BE. (B) THE FRACTION IS COMPUTED AS FOLLOWS: THE NUMERATOR IS THE EXCESS OF NEW YORK ADJUSTED GROSS INCOME FOR THE TAXABLE YEAR OVER THE INCOME THRESHOLD. FOR THE PURPOSES OF THIS SUBPARAGRAPH, THE INCOME THRESHOLD IS EQUAL TO ONE HUNDRED FIFTY THOUSAND DOLLARS. THE DENOMINATOR IS FIFTY THOUSAND DOLLARS. PROVIDED, HOWEVER, THE FRACTION SHALL NOT BE GREATER THAN ONE. (3) RESIDENT UNMARRIED INDIVIDUALS, RESIDENT MARRIED INDIVIDUALS FILING SEPARATE RETURNS AND RESIDENT ESTATES AND TRUSTS. (A) THE TAX TABLE BENEFIT IS THE DIFFERENCE BETWEEN (I) THE AMOUNT OF TAXABLE INCOME SET FORTH IN THE TAX TABLE IN SUBSECTION (C) OF THIS SECTION, OR IN SECTION SIX HUNDRED NINETY-NINE OF THIS ARTICLE, AS THE CASE MAY BE, NOT SUBJECT TO THE HIGHEST RATE OF TAX FOR THE TAXABLE YEAR MULTIPLIED BY SUCH RATE AND (II) THE HIGHEST DOLLAR DENOMINATED TAX SET FORTH IN THE TAX TABLE APPLICABLE TO THE TAXABLE YEAR IN SUBSECTION (C) OF THIS SECTION OR SECTION SIX HUNDRED NINETY-NINE OF THIS ARTICLE, AS THE CASE MAY BE. (B) THE FRACTION IS COMPUTED AS FOLLOWS: THE NUMERATOR IS THE EXCESS OF NEW YORK ADJUSTED GROSS INCOME FOR THE TAXABLE YEAR OVER THE INCOME THRESHOLD. FOR THE PURPOSES OF THIS SUBPARAGRAPH, THE INCOME THRESHOLD IS EQUAL TO ONE HUNDRED TWENTY-FIVE THOUSAND DOLLARS. THE DENOMINATOR IS FIFTY THOUSAND DOLLARS. PROVIDED, HOWEVER, THE FRACTION SHALL NOT BE GREATER THAN ONE. (D-3) TAX TABLE BENEFIT RECAPTURE. FOR TAXABLE YEARS BEGINNING ON AND AFTER JANUARY FIRST, TWO THOUSAND TWELVE, THERE IS HEREBY IMPOSED A SUPPLEMENTAL TAX IN ADDITION TO THE TAX IMPOSED UNDER SUBSECTIONS (A), (B) AND (C) OF THIS SECTION FOR THE PURPOSE OF RECAPTURING THE BENEFIT OF THE TAX TABLES CONTAINED IN SUCH SUBSECTIONS OR SECTION SIX HUNDRED NINETY-NINE OF THIS ARTICLE, AS THE CASE MAY BE. THE SUPPLEMENTAL TAX
SHALL BE AN AMOUNT EQUAL TO THE TAX TABLE BENEFIT MULTIPLIED BY A FRAC- TION. (1) RESIDENT MARRIED INDIVIDUALS FILING JOINT RETURNS AND RESIDENT SURVIVING SPOUSES. (A) THE TAX TABLE BENEFIT IS THE DIFFERENCE BETWEEN (I) THE AMOUNT OF TAXABLE INCOME SET FORTH IN THE TAX TABLE IN SUBSECTION (A) OF THIS SECTION, OR IN SECTION SIX HUNDRED NINETY-NINE OF THIS ARTICLE, AS THE CASE MAY BE, NOT SUBJECT TO THE HIGHEST RATE OF TAX FOR THE TAXABLE YEAR MULTIPLIED BY SUCH RATE AND (II) THE HIGHEST DOLLAR DENOMINATED TAX SET FORTH IN THE TAX TABLE APPLICABLE TO THE TAXABLE YEAR IN SUBSECTION (A) OF THIS SECTION OR SECTION SIX HUNDRED NINETY-NINE OF THIS ARTICLE, AS THE CASE MAY BE. (B) THE FRACTION IS COMPUTED AS FOLLOWS: THE NUMERATOR IS THE EXCESS OF NEW YORK ADJUSTED GROSS INCOME FOR THE TAXABLE YEAR OVER THE INCOME THRESHOLD. FOR THE PURPOSES OF THIS SUBPARAGRAPH, THE INCOME THRESHOLD IS EQUAL TO TWO HUNDRED FIFTY THOUSAND DOLLARS. THE DENOMINATOR IS FIFTY THOUSAND DOLLARS. PROVIDED, HOWEVER, THE FRACTION SHALL NOT BE GREATER THAN ONE. (2) RESIDENT HEADS OF HOUSEHOLDS. (A) THE TAX TABLE BENEFIT IS THE DIFFERENCE BETWEEN (I) THE AMOUNT OF TAXABLE INCOME SET FORTH IN THE TAX TABLE IN SUBSECTION (B) OF THIS SECTION, OR IN SECTION SIX HUNDRED NINETY-NINE OF THIS ARTICLE, AS THE CASE MAY BE, NOT SUBJECT TO THE HIGHEST RATE OF TAX FOR THE TAXABLE YEAR MULTIPLIED BY SUCH RATE AND (II) THE HIGHEST DOLLAR DENOMINATED TAX SET FORTH IN THE TAX TABLE APPLICABLE TO THE TAXABLE YEAR IN SUBSECTION (B) OF THIS SECTION OR SECTION SIX HUNDRED NINETY-NINE OF THIS ARTICLE, AS THE CASE MAY BE. (B) THE FRACTION IS COMPUTED AS FOLLOWS: THE NUMERATOR IS THE EXCESS OF NEW YORK ADJUSTED GROSS INCOME FOR THE TAXABLE YEAR OVER THE INCOME THRESHOLD. FOR THE PURPOSES OF THIS SUBPARAGRAPH, THE INCOME THRESHOLD IS EQUAL TO ONE HUNDRED SEVENTY-FIVE THOUSAND DOLLARS. THE DENOMINATOR IS FIFTY THOUSAND DOLLARS. PROVIDED, HOWEVER, THE FRACTION SHALL NOT BE GREATER THAN ONE. (3) RESIDENT UNMARRIED INDIVIDUALS, RESIDENT MARRIED INDIVIDUALS FILING SEPARATE RETURNS AND RESIDENT ESTATES AND TRUSTS. (A) THE TAX TABLE BENEFIT IS THE DIFFERENCE BETWEEN (I) THE AMOUNT OF TAXABLE INCOME SET FORTH IN THE TAX TABLE IN SUBSECTION (C) OF THIS SECTION, OR IN SECTION SIX HUNDRED NINETY-NINE OF THIS ARTICLE, AS THE CASE MAY BE, NOT SUBJECT TO THE HIGHEST RATE OF TAX FOR THE TAXABLE YEAR MULTIPLIED BY SUCH RATE AND (II) THE HIGHEST DOLLAR DENOMINATED TAX SET FORTH IN THE TAX TABLE APPLICABLE TO THE TAXABLE YEAR IN SUBSECTION (C) OF THIS SECTION OR SECTION SIX HUNDRED NINETY-NINE OF THIS ARTICLE, AS THE CASE MAY BE. (B) THE FRACTION IS COMPUTED AS FOLLOWS: THE NUMERATOR IS THE EXCESS OF NEW YORK ADJUSTED GROSS INCOME FOR THE TAXABLE YEAR OVER THE INCOME THRESHOLD. FOR THE PURPOSES OF THIS SUBPARAGRAPH, THE INCOME THRESHOLD IS EQUAL TO ONE HUNDRED FIFTY THOUSAND DOLLARS. THE DENOMINATOR IS FIFTY THOUSAND DOLLARS. PROVIDED, HOWEVER, THE FRACTION SHALL NOT BE GREATER THAN ONE. S 3. Subsection (d) of section 601 of the tax law is REPEALED. S 4. This act shall take effect immediately and shall apply to taxable years starting on or after January 1, 2010; provided, however that section two of this act shall expire and be deemed repealed January 1, 2013 and section three of this act shall take effect January 1, 2013.

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