Postpones expiration of certain tax rates and taxes in the city of New York

Section 2 of the bill amends Tax Law section 1301(a), relating to the tax on the personal income of residents of the City and the City minimum income tax. The amendment of Tax Law section 1301 (a)(1) authorizes the City to extend the existing rates of the personal income tax (the rates set forth in Tax Law section 1304 (a)(1)(A), (a)(2)(A) and (a)(3)(A) for an additional three years (for taxable years beginning before 2015) and delays the implementation of lower personal income tax rates (the rates set forth in Tax Law section 1304 (b) for three years (until taxable years beginning after 2014). The amendment of Tax Law section 1301(a)(2) authorizes the City to impose the minimum income tax for an additional three years (for taxable years beginning before 2015). Section 7 of the bill makes a conforming change to the opening paragraph of Administrative Code section 11-1701, which relates to the tax on the personal income of residents of the City. The amendment extends the existing personal income tax rates (the rates set forth in 11-1701 (a) for an additional three years (for taxable years beginning before 2015) and delays the implementation of lower personal income tax rates (the rates set forth in 11-1701(b) for three years (until taxable years beginning after 2014).

Sections 3 and 9 of the bill amend Tax Law section 1301-A (a) and Administrative Code section 11-1702, relating to the City minimum income tax. The Tax Law amendment extends the authority of the City to impose the minimum income tax at 2.85% for an additional three years (for taxable years beginning before 2015). (The rate is scheduled to fall to 2.5% beginning in 2012.) The Administrative Code amendment imposes the minimum tax at the existing rate of 2.85% for an additional three years (for taxable years beginning before 2015).

Sections 4 and 8 of the bill amend Tax Law section 1304 (b) and Administrative Code section 11-1701 (b), relating to the tax on the personal income of residents of the City. They make conforming changes to the lower personal income tax rates, delaying their

implementation for three years (until taxable years beginning after 2014).

Sections 5 and 10 of the bill amend Tax Law section 1304-B (a) and Administrative Code section 11-1704.1 (a)(1), relating to the additional tax on City taxable income. The Tax Law amendment authorizes the City to impose the additional tax for an additional three years at the rate of 14% (for taxable years beginning before 2015) and extends the authority of the City to reduce the additional tax by local law for taxable years beginning before 2015. The Administrative Code amendment imposes the additional tax for an additional three years at the rate of 14% (for taxable years beginning before 2015).

Sections 6, 14 and 15 of the bill amend section 11-604(1)(E) of the Administrative Code, Chapter 884 of the Laws of 1975 and Chapter 882 of the Laws of 1977, relating to the City general corporation tax. The current tax rate is the greater of 8.85% on income, 1.5 mills on business and investment capital, 8.85% of 15% of income plus the amount of salaries and other compensation paid to any person who at any time during the taxable year owned more than 5% of the taxpayer's capital stock or a minimum tax based on the amount of New York city receipts. There is also a .75 mill tax on subsidiary capital. (On January 1, 2012, the rates are scheduled to drop to 6.7%, 1 mill, 6.7% and $25, respectively, and .5 millon subsidiary capital.) The amendments will continue the current rates until December 31, 2014.

Section 11 of the bill amends Administrative Code section 11-2002 (a), relating to the 4.5% sales tax on beauty and barbering services. The amendment imposes the tax for an additional three years (until November 30, 2014). (Tax Law section 1212-A (a)(2) authorizes the City to impose a sales tax on beauty and barbering services.)

Section 13 of the bill amends Chapter 877 of the laws of 1975, relating to the New York City cigarette tax. The current cigarette tax rate is 75 cents for each ten cigarettes, but is set to decline to 2 cents for each ten cigarettes on January 1, 2012. The amendment extends the existing rate of tax for an additional three years (until December 31, 2014).

Section 16 of the bill provides that it shall take effect immediately,

Reasons for support

If the current levels of taxation described above are allowed to expire at the end of 2011, the City will lose $2.1 billion in fiscal year 2012, and over $6 billion in revenue annually thereafter. Most of these taxes have been in effect since the 1970s and have become an accepted part of the City's tax structure. These taxes have been extended periodically, most recently by Chapter 525 of the Laws of 2008. The City's need for the revenue generated by these taxes will continue into the foreseeable future and the loss of that revenue would have a devastating effect on the City budget and services to the public.