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Sponsor's memo
BILL NUMBER:A10445
Title of bill
An act to amend the tax law, in relation to establishing a cap on certain tax credits, to impose a surcharge against certain taxes and to increase the alternative minimum tax on corporations; and providing for the repeal of certain provisions upon expiration thereof
Purpose or general idea of bill
Section one of the bill provides for credits or refunds in any tax year to be limited to a maximum of $15 million. If any of the credits are in excess of that cap, they may be carried over to the following tax year or years.
Section 2 of the bill imposes a surcharge of 15% on the final tax liability of article nine and nine-A corporation taxes, the bank and insurance taxes in articles 32 and 33. This surcharge will expire in 4 years.
Section 3 of the bill raises the alternative minimum corporate tax to 3.5%.
Justification
Rates of taxation on business income. have declined substantially over the past 23 years and tax rates on corporate profits would still be below the levels of the mid-to-late nineteen nineties even after the new legislation. With New York business profits estimated at about $130 billion in 2010, the impact of the legislation in-2010 would be to require business in New York to pay an additional 1% of its income, which would provide the state with revenue to assure stability in education, health care, transportation and other vital services. That number would move to about 1.3% in 2011. The bill provides for:
* a 15% surcharge on final corporate tax liability, estimated to yield about $950. million in 2010. This surcharge would be in effect for four years;
* an increase in the corporate alternative minimum tax from 1.5% to 3.5%, with an estimated yield of $200 million;
* a cap of $15 million per business entity in the use of tax credits, which would yield about $600 million, and would take effect in,the 2011 tax year.
About one-fourth of the revenue from the tax credit cap would be avail- able for the 201011 fiscal year. Businesses would still be eligible for tax credits but would have to carry them forward to future tax years. The New York State Department of Tax and Finance provided my office with the information needed to derive the estimates for the credit tax cap.
New York State's top rate on business income now stands at 7.1%, down from 10% in 1986, and 9% until 1998. The alternative minimum tax stood at 5% in the 1990s until 1995, when it was reduced to 3.5%. The rate was only dropped to 1.5% in 2007. New York State's top rate is lower than 23 other states now and would still be lower than 15 other states after the
legislation. The rate would go-to 8.1 % after the surcharge, which would be in effect for four years. As a result, the new temporary top rate would still be lower than the top rate in effect in 1998.
It is only appropriate that businesses in New York State accept these small increases to assist New York State in balancing its budget in these tough economic times.
Prior legislative history
New bill.
Fiscal implications to state and local government
These proposals would raise $1.3 billion in fiscal year 2010-11 and $1.75 billion in 2011-12.
Effective date
Immediate and shall apply to tax year beginning January 1, 2010. The surcharge expires in 4 years.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.