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 2018) 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 2017). 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 2018). 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 2018) 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 2017).

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 percent for an additional three years (for taxable years beginning before 2018). (The rate is scheduled to fall to 2.5 percent beginning in 2015.) The Administrative Code amendment imposes the minimum tax at the existing rate of 2.85 percent for an additional three years (for taxable years beginning before 2018).

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 2017).

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 percent (for taxable years beginning before 2018) and extends the authority of the City to reduce the additional tax by local law for taxable years beginning before 2018. The Administrative Code amendment imposes the additional tax for an additional three years at the rate of 14 percent (for taxable years beginning before 2018).

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 percent on income, 1.5 mills on business and investment capital, 8.85 percent of 15 percent 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 percent of the taxpayer's capital stock or a minimum tax based on the amount of New York city receipts. There is also a 0.75 mill tax on subsidiary capital. (On January 1, 2015, the rates are scheduled to drop to 6.7 percent, 1 mill, 6.7 percent and $25, respectively, and .5 mill on subsidiary capital.) The amendments will continue the current rates until December 31, 2017.

Section 11 of the bill amends Administrative Code section 11-2002(a), relating to the 4.5 percent sales tax on beauty and barbering services. The amendment imposes the tax for an additional three years (until November 30, 2017). (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 between 2 and 4 cents for each ten cigarettes, depending on tar and nicotine content, as of January 1, 2015. The amendment extends the existing rate of tax for an additional three years (until December 31, 2017).

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

Reasons for support

Most of the taxes that are extended by this legislation have been in effect for nearly forty years and as such have become an accepted and expected part of the City's tax and budgeting structure. The $7 billion in annual revenue (beginning in City Fiscal Year 2016) at stake in this legislation is a large percentage of the support necessary for critical municipal services, such as the core public safety functions performed by the City's police and fire departments. It is, therefore, of crucial importance that the revenue generated by these taxes will continue into the foreseeable future.

In the event that these taxes were allowed to expire, the effect of the loss of such revenue would be nothing short of devastating to the City's budget and the City's ability to provide basic services to its residents - a citizenry which comprises over 42% of the total population of the State of New York. It is important to note that

these taxes have been regularly extended, most recently by Chapter 209 of the Laws of 2011.

Accordingly, the Mayor urges the earliest possible favorable consideration of this proposal by the Legislature.

Effective date

Immediately.