Relates to the modification and extension of a tax rate on income in excess of one million dollars

Summary of provisions

Section 1 of the bill amends subsections (a), (b), and (c) of section 601 of the tax law, as amended by section 1 of part Z-1 of chapter 57 of the laws of 2009 the tax rates imposed for the taxable years beginning after 2011 and before 2013 are as follows:

(a) for married individuals filing joint returns and surviving spouses:

If new york income is

THE TAX IS:

Not over $16,000 4% Over $16,000/not over $22,000 $640 +4.5% of excess over $16,000 Over $22,000/not over $16,000 $910 +5.25% of excess over $22,000 Over $26,000/not over $40,000 $1,120 +5.9% of excess over $26,000 Over $40,000/not over $1,000,000 $1,946 +6.85% of excess over $40,000 Over $1,000,000 $67,706 +8.97% of excess over $1,000,00

(b) for heads of households:

If new york taxable income is

THE TAX IS:

Not over $11,000 4% Over $11,000/not over $15,000 $440 +4.5% of excess over $11,000 Over $15,000/not over $17,000 $620 +5.25 of excess over $15,000 Over $17,000/not over $30,000 $725 +5.9% of excess over $17,000 Over $30,000/not over $1,000,000 $1,492 +6.85% of excess over $30,000 Over $1,000,000 $67,937 +8.97% of excess over $1,000,000

(c) for unmarried individuals, married individuals filing separate returns and estates and trusts:

If new york taxable income is

THE TAX IS:

Not over $8,000 4% Over $8,000/not over $11,000 $320 +4.5% of excess over $8,000 Over $11,000/not over $13,000 $455 +5.25% of excess over $11,000 Over $13,000/not over $20,000 $560 +5.9% of excess over $13,000 Over $20,000/not over $1,000,000 $973 +6.85% of excess over $20,000 Over $1,000,000 $68,103 +8.97% of excess over $1,000,000

Section 2 of the bill amends subparagraph (B) of paragraph 3 of subsection (d) of section 601 of the tax law, as amended by section 3 of part Z-1 of chapter 57 of the laws of 2009 providing that for the taxa- ble years beginning after 2011 and before 2013 the fraction computed for taxpayers with adjusted gross income over $500,000 is computed as follows: the numerator is the lesser of $50,000 or the excess of New York adjusted gross income for the taxable year over $1,000,000 and the denominator is $50,000.

Section 3 of the bill amends clause (ii) of subparagraph (B) of para- graph 3 of subsection (c) of section 685 of the tax law by adding a new undesignated paragraph to provide that the tax shown on such return for taxable year beginning in 2011 shall be calculated as if such year began in 2012.

Sections 4 and 5 of the bill address the responsibilities of the Commis- sioner of Taxation and Finance in determining the deductions and with- holding amounts required to be adjusted as a result of the new tax tables created by this act and of publicizing these changes to notify taxpayers.

Section 6 creates the educational assistance fund. This fund will receive 30 percent of revenues attributable to maintaining the current rates on millionaires.

Section 7 provides an immediate effective date.

Justification

For the past several years New York has faced devastating budget defi- cits each year with a current fiscal year deficit of nearly $10 billion.

Although the Governor and the Legislature were able to reach a budget agreement on time, that budget will cause extreme hardship in the form of dramatic cuts to schools, health care, energy and environmental programs and a drastic reduction in the state workforce.

While these spending cuts were in some part necessary to address the severe budget shortfall there must be a sense of shared sacrifices by all sectors of our communities so that this burden does not fall on

those least able to bear it The legislature must look for ways to increase revenue in a responsible and legitimate manner.

One such opportunity is to amend and continue what is often referred to as the "Personal Income Tax Surcharge" or the "Millionaire's Tax". These additional taxes were initially imposed to extend the responsibil- ity for covering the costs of necessary services and benefits the state provides beyond the lower and middle class to those individuals who are fortunate enough to be making significant taxable incomes. The current tax surcharges are set to expire at the end of this year and the legis- lature must act to address what will be a significant loss in tax reven- ue. While some have argued that the current tax is not a "Millionaire's Tax", but instead a tax which harms small businesses, this legislation will amend the current tax surcharge so that it does indeed only apply to those fortunate taxpayers making in excess of$1,000,000.

Recent petitions and letters from "millionaires" across the country show that these individuals are more than willing to pay additional taxes to address the serious financial crises being faced by this state and this nation. 1) Millionaires like Warren Buffet have argued in favor of high- er income taxes for the wealthy stating that "tax hikes on the rich are essential to an economic recovery".

Therefore, it is only reasonable that New York state amends its income tax laws to require those wealthiest New Yorkers to help bridge the budget gap so that responsibility does not fall solely on the shoulders of our poor, our children and our seniors who have so little and are losing even more with every state budget that cuts their services and fails to come up with viable new sources of revenue.

Prior legislative history

New Bill.

Fiscal implications for state and local governments

To be determined.

Effective date

This act shall take effect immediately.

Footnote

(1) http://biggovernment.com/publius/2010/11/25/left-millionaires -tax- us-more/