Reorganizes the tax code and increases the standard deductions for all resident taxpayers

1 Co-sponsor

• Velmanette Montgomery

Title of bill

An act to amend the tax law, in relation to income tax rates and standard deductions

Purpose

Reorganizes the tax code and increases the standard deductions for all tax filers.

Summary of provisions

Amends section 601 of the tax law to add brackets and increase income tax rates on wealthy tax filers. The number of brackets increases from 5 to 9, while rates change from 4-6.85 to 4-10.3%. The tax increases fund a tax cut, amending section 614 of the tax law to double the standard deduction for each type of tax filer. The bill also authorizes New York State Tax & Finance Department to administer the tax cuts via a debit card, which will ensure the money is spent by recipients and stimulate the economy as a result.

Justification

2009 finds many New Yorkers encountering the most difficult economic challenges of their lifetimes. What began as a crisis in mortgage securities on Wall Street is now significantly impacting Main Street. 145,000 New Yorkers lost their jobs in the last year. 50,000 homeowners experienced foreclosure in 2008.

Unfortunately, the immediate future looks no better. Tens of thousands more New Yorkers will lose their homes. Unemployment in New York City will likely surge to over 8 percent, and will hit double digits for minority workers.

The severe recession has also had a profound impact on state and local budgets. Because governments are required to balance their budgets by law, spending cuts and regressive fees have been proposed to make sure the books are balanced. These spending cuts and fees not only downsize or eliminate important programs in health care, education, and other areas--they cause the economy to contract even more, creating a vicious downward spiral that could send the economy plummeting further.

This bill will reform the state personal income tax (PIT). The bill will cut taxes for most tax filers making less than $250,000 a year. For example, a married couple making 100K will receive over a tax cut of over $1000 dollars under my proposal. With New Yorkers tightening their belts during this fiscal downturn, it's essential we put money back in people's pockets so they can meet their bills and buy essential items. Tax relief will also boost consumer spending, help small businesses, and stimulate the economy.

In addition to tax relief for middle-class New Yorkers, my proposal will generate an additional $1 billion to reduce spending cuts to vital programs and the need for onerous fees on everything from Ipod downloads to movie tickets. The revenues for my proposal are generated by increasing taxes on the most fortunate and wealthy tax filers. It is appropriate that the wealthiest pay a bit more during this difficult economic time, given that they experienced a tremendous gain in wealth over the last three decades and have traditionally paid much more of their income in state taxes.

Fiscal implications

The proposal will produce $4 billion in income, $3 billion of which will be used for the tax cut with $1 billion set aside to reduce budget cuts.

Effective date

This act shall take effect immediately.