STATE OF NEW YORK ________________________________________________________________________ 8221--A 2021-2022 Regular Sessions IN ASSEMBLY August 25, 2021 ___________ Introduced by M. of A. BYRNE -- read once and referred to the Committee on Ways and Means -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT in relation to enacting the "Invest in New Yorkers Act"; and to amend the tax law, in relation to the effectiveness and fairness of the personal income tax rate by eliminating the state's current tax recapture system which unfairly penalizes people who work and earn more money moving them into a higher tax bracket The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Short title. This act shall be known and may be cited as 2 the "Invest in New Yorkers Act". 3 § 2. The opening paragraph of subsection (d) of section 601 of the tax 4 law, as amended by section 1 of part R of chapter 63 of the laws of 5 2003, is amended to read as follows: 6 For taxable years beginning after nineteen hundred ninety and before 7 January first, two thousand twenty-two, there is hereby imposed a 8 supplemental tax in addition to the tax imposed under subsections (a), 9 (b) and (c) of this section for the purpose of recapturing the benefit 10 of the tax tables contained in such subsections or section six hundred 11 ninety-nine of this article, as the case may be. The supplemental tax 12 shall be an amount equal to the sum of the tax table benefits in para- 13 graphs one, two and three of this subsection multiplied by their respec- 14 tive fractions in such paragraphs provided, however, that paragraph two 15 of this subsection shall not apply to taxpayers that are not subject to 16 the second highest rate of tax. 17 § 3. The opening paragraph of subsection (d-1) of section 601 of the 18 tax law, as amended by section 4 of part TT of chapter 60 of the laws of 19 2016, is amended to read as follows: 20 Notwithstanding the provisions of subsection (d) of this section, for 21 taxable years beginning after two thousand eleven and before January EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD09688-04-1

A. 8221--A 2 1 first, two thousand twenty-two, there is hereby imposed a supplemental 2 tax in addition to the tax imposed under subsections (a), (b) and (c) of 3 this section for the purpose of recapturing the benefit of the tax 4 tables contained in such subsections. During these taxable years, any 5 reference in this chapter to subsection (d) of this section shall be 6 read as a reference to this subsection. 7 § 4. The opening paragraph of paragraph 1 of subsection (d-1) of 8 section 601 of the tax law, as amended by section 5 of part TT of chap- 9 ter 60 of the laws of 2016, is amended to read as follows: 10 For resident married individuals filing joint returns and resident 11 surviving spouses, the supplemental tax shall be an amount equal to the 12 sum of the tax table benefits described in subparagraphs (A), (B), (C) 13 and (D) of this paragraph multiplied by their respective fractions in 14 such subparagraphs. Furthermore, in making the calculations described in 15 these subparagraphs in taxable years beginning after tax year two thou- 16 sand seventeen and before January first, two thousand twenty-two, the 17 applicable tax rates specified in subparagraph (B) of paragraph one of 18 subsection (a) of this section shall be substituted for the rates refer- 19 enced in these subparagraphs. 20 § 5. Subparagraph (D) of paragraph 1 of subsection (d-1) of section 21 601 of the tax law, as amended by section 4 of part A of chapter 59 of 22 the laws of 2021, is amended to read as follows: 23 (D) The tax table benefit is the difference between (i) the amount of 24 taxable income set forth in the tax table in paragraph one of subsection 25 (a) of this section not subject to the 8.82 percent rate of tax for the 26 taxable year multiplied by such rate and (ii) the dollar denominated tax 27 for such amount of taxable income set forth in the tax table applicable 28 to the taxable year in paragraph one of subsection (a) of this section 29 less the sum of the tax table benefits in subparagraphs (A), (B) and (C) 30 of this paragraph. The fraction for this subparagraph is computed as 31 follows: the numerator is the lesser of fifty thousand dollars or the 32 excess of New York adjusted gross income for the taxable year over two 33 million dollars and the denominator is fifty thousand dollars. This 34 subparagraph shall apply only to taxable years beginning on or after 35 January first, two thousand twelve and before January first, two thou- 36 sand [~~twenty-one and for tax years beginning on or after January first,~~ 37 ~~two thousand twenty-eight~~] twenty-two. 38 § 6. Subparagraph (E) of paragraph 1 of subsection (d-1) of section 39 601 of the tax law, as amended by section 4 of part A of chapter 59 of 40 the laws of 2021, is amended to read as follows: 41 (E) The tax table benefit is the difference between (i) the amount of 42 taxable income set forth in the tax table in paragraph one of subsection 43 (a) of this section not subject to the 9.65 percent rate of tax for the 44 taxable year multiplied by such rate and (ii) the dollar denominated tax 45 for such amount of taxable income set forth in the tax table applicable 46 to the taxable year in paragraph one of subsection (a) of this section 47 less the sum of the tax table benefits in subparagraphs (A), (B), and 48 (C) of this paragraph. The fraction for this subparagraph is computed as 49 follows: the numerator is the lesser of fifty thousand dollars or excess 50 of New York adjusted gross income for the taxable year over two million 51 dollars and the denominator is fifty thousand dollars. This subparagraph 52 shall apply only to the taxable years beginning on or after January 53 first, two thousand twenty-one and before January first, two thousand 54 [~~twenty-eight~~] twenty-two.

A. 8221--A 3 1 § 7. Subparagraph (F) of paragraph 1 of subsection (d-1) of section 2 601 of the tax law, as added by section 4 of part A of chapter 59 of the 3 laws of 2021, is amended to read as follows: 4 (F) The tax table benefit is the difference between (i) the amount of 5 taxable income set forth in the tax table in paragraph one of subsection 6 (a) of this section not subject to the 10.30 percent rate of tax for the 7 taxable year multiplied by such rate and (ii) the dollar denominated tax 8 for such amount of taxable income set forth in the tax table applicable 9 to the taxable year in paragraph one of subsection (a) of this section 10 less the sum of the tax table benefits in subparagraphs (A), (B), (C) 11 and (E) of this paragraph. The fraction for this subparagraph is 12 computed as follows: the numerator is the lesser of fifty thousand 13 dollars or excess of New York adjusted gross income for the taxable year 14 over five million dollars and the denominator is fifty thousand dollars. 15 This subparagraph shall apply only to the taxable years beginning on or 16 after January first, two thousand twenty-one and before January first, 17 two thousand [~~twenty-eight~~] twenty-two. 18 § 8. Subparagraph (G) of paragraph 1 of subsection (d-1) of section 19 601 of the tax law, as added by section 4 of part A of chapter 59 of the 20 laws of 2021, is amended to read as follows: 21 (G) The tax table benefit is the difference between (i) the amount of 22 taxable income set forth in the tax table in paragraph one of subsection 23 (a) of this section not subject to the 10.90 percent rate of tax for the 24 taxable year multiplied by such rate and (ii) the dollar denominated tax 25 for such amount of taxable income set forth in the tax table applicable 26 to the taxable year in paragraph one of subsection (a) of this section 27 less the sum of the tax table benefits in subparagraphs (A), (B), (C), 28 (E) and (F) of this paragraph. The fraction for this subparagraph is 29 computed as follows: the numerator is the lesser of fifty thousand 30 dollars or excess of New York adjusted gross income for the taxable year 31 over twenty-five million dollars and the denominator is fifty thousand 32 dollars. This subparagraph shall apply only to the taxable years begin- 33 ning on or after January first, two thousand twenty-one and before Janu- 34 ary first, two thousand [~~twenty-eight~~] twenty-two. 35 § 9. The opening paragraph of paragraph 2 of subsection (d-1) of 36 section 601 of the tax law, as amended by section 6 of part TT of chap- 37 ter 60 of the laws of 2016, is amended to read as follows: 38 For resident heads of households, the supplemental tax shall be an 39 amount equal to the sum of the tax table benefits described in subpara- 40 graphs (A), (B) and (C) of this paragraph multiplied by their respective 41 fractions in such subparagraphs. Furthermore, in making the calculations 42 described in these subparagraphs in taxable years beginning after tax 43 year two thousand seventeen and before January first, two thousand twen- 44 ty-two, the applicable tax rates specified in subparagraph (B) of para- 45 graph one of subsection (b) of this section shall be substituted for the 46 rates referenced in these subparagraphs. 47 § 10. Subparagraph (C) of paragraph 2 of subsection (d-1) of section 48 601 of the tax law, as amended by section 5 of part A of chapter 59 of 49 the laws of 2021, is amended to read as follows: 50 (C) The tax table benefit is the difference between (i) the amount of 51 taxable income set forth in the tax table in paragraph one of subsection 52 (b) of this section not subject to the 8.82 percent rate of tax for the 53 taxable year multiplied by such rate and (ii) the dollar denominated tax 54 for such amount of taxable income set forth in the tax table applicable 55 to the taxable year in paragraph one of subsection (b) of this section 56 less the sum of the tax table benefits in subparagraphs (A) and (B) of

A. 8221--A 4 1 this paragraph. The fraction for this subparagraph is computed as 2 follows: the numerator is the lesser of fifty thousand dollars or the 3 excess of New York adjusted gross income for the taxable year over one 4 million five hundred thousand dollars and the denominator is fifty thou- 5 sand dollars. This subparagraph shall apply only to taxable years begin- 6 ning on or after January first, two thousand twelve and before January 7 first, two thousand [~~twenty-one and for tax years beginning on or after~~ 8 ~~January first, two thousand twenty-eight~~] twenty-two. 9 § 11. Subparagraph (D) of paragraph 2 of subsection (d-1) of section 10 601 of the tax law, as amended by section 5 of part A of chapter 59 of 11 the laws of 2021, is amended to read as follows: 12 (D) The tax table benefit is the difference between (i) the amount of 13 taxable income set forth in the tax table in paragraph one of subsection 14 (a) of this section not subject to the 9.65 percent rate of tax for the 15 taxable year multiplied by such rate and (ii) the dollar denominated tax 16 for such amount of taxable income set forth in the tax table applicable 17 to the taxable year in paragraph one of subsection (a) of this section 18 less the sum of the tax table benefits in subparagraphs (A) and (B) of 19 this paragraph. The fraction for this subparagraph is computed as 20 follows: the numerator is the lesser of fifty thousand dollars or excess 21 of New York adjusted gross income for the taxable year over one million 22 five hundred thousand dollars and the denominator is fifty thousand 23 dollars. This subparagraph shall apply only to the taxable years begin- 24 ning on or after January first, two thousand twenty-one and before Janu- 25 ary first, two thousand [~~twenty-eight~~] twenty-two. 26 § 12. Subparagraph (E) of paragraph 2 of subsection (d-1) of section 27 601 of the tax law, as added by section 5 of part A of chapter 59 of the 28 laws of 2021, is amended to read as follows: 29 (E) The tax table benefit is the difference between (i) the amount of 30 taxable income set forth in the tax table in paragraph one of subsection 31 (a) of this section not subject to the 10.30 percent rate of tax for the 32 taxable year multiplied by such rate and (ii) the dollar denominated tax 33 for such amount of taxable income set forth in the tax table applicable 34 to the taxable year in paragraph one of subsection (a) of this section 35 less the sum of the tax table benefits in subparagraphs (A), (B) and (D) 36 of this paragraph. The fraction for this subparagraph is computed as 37 follows: the numerator is the lesser of fifty thousand dollars or excess 38 of New York adjusted gross income for the taxable year over five million 39 dollars and the denominator is fifty thousand dollars. This subparagraph 40 shall apply only to the taxable years beginning on or after January 41 first, two thousand twenty-one and before January first, two thousand 42 [~~twenty-eight~~] twenty-two. 43 § 13. Subparagraph (F) of paragraph 2 of subsection (d-1) of section 44 601 of the tax law, as added by section 5 of part A of chapter 59 of the 45 laws of 2021, is amended to read as follows: 46 (F) The tax table benefit is the difference between (i) the amount of 47 taxable income set forth in the tax table in paragraph one of subsection 48 (a) of this section not subject to the 10.90 percent rate of tax for the 49 taxable year multiplied by such rate and (ii) the dollar denominated tax 50 for such amount of taxable income set forth in the tax table applicable 51 to the taxable year in paragraph one of subsection (a) of this section 52 less the sum of the tax table benefits in subparagraphs (A), (B), (D) 53 and (E) of this paragraph. The fraction for this subparagraph is 54 computed as follows: the numerator is the lesser of fifty thousand 55 dollars or excess of New York adjusted gross income for the taxable year 56 over twenty-five million dollars and the denominator is fifty thousand

A. 8221--A 5 1 dollars. This subparagraph shall apply only to the taxable years begin- 2 ning on or after January first, two thousand twenty-one and before Janu- 3 ary first, two thousand [~~twenty-eight~~] twenty-two. 4 § 14. The opening paragraph of paragraph 3 of subsection (d-1) of 5 section 601 of the tax law, as amended by section 7 of part TT of chap- 6 ter 60 of the laws of 2016, is amended to read as follows: 7 For resident unmarried individuals, resident married individuals 8 filing separate returns and resident estates and trusts, the supple- 9 mental tax shall be an amount equal to the sum of the tax table benefits 10 described in subparagraphs (A), (B) and (C) of this paragraph multiplied 11 by their respective fractions in such subparagraphs. Furthermore, in 12 making the calculations described in these subparagraphs in taxable 13 years beginning after tax year two thousand seventeen and before January 14 first, two thousand twenty-one, the applicable tax rates specified in 15 subparagraph (B) of paragraph one of subsection (c) of this section 16 shall be substituted for the rates referenced in these subparagraphs. 17 § 15. Subparagraph (C) of paragraph 3 of subsection (d-1) of section 18 601 of the tax law, as amended by section 6 of part A of chapter 59 of 19 the laws of 2021, is amended to read as follows: 20 (C) The tax table benefit is the difference between (i) the amount of 21 taxable income set forth in the tax table in paragraph one of subsection 22 (c) of this section not subject to the 8.82 percent rate of tax for the 23 taxable year multiplied by such rate and (ii) the dollar denominated tax 24 for such amount of taxable income set forth in the tax table applicable 25 to the taxable year in paragraph one of subsection (c) of this section 26 less the sum of the tax table benefits in subparagraphs (A) and (B) of 27 this paragraph. The fraction for this subparagraph is computed as 28 follows: the numerator is the lesser of fifty thousand dollars or the 29 excess of New York adjusted gross income for the taxable year over one 30 million dollars and the denominator is fifty thousand dollars. This 31 subparagraph shall apply only to taxable years beginning on or after 32 January first, two thousand twelve and before January first, two thou- 33 sand [~~twenty-one and for tax years beginning on or after January first,~~ 34 ~~two thousand twenty-eight~~] twenty-two. 35 § 16. Subparagraph (D) of paragraph 3 of subsection (d-1) of section 36 601 of the tax law, as amended by section 6 of part A of chapter 59 of 37 the laws of 2021, is amended to read as follows: 38 (D) The tax table benefit is the difference between (i) the amount of 39 taxable income set forth in the tax table in paragraph one of subsection 40 (a) of this section not subject to the 9.65 percent rate of tax for the 41 taxable year multiplied by such rate and (ii) the dollar denominated tax 42 for such amount of taxable income set forth in the tax table applicable 43 to the taxable year in paragraph one of subsection (a) of this section 44 less the sum of the tax table benefits in subparagraphs (A) and (B) of 45 this paragraph. The fraction for this subparagraph is computed as 46 follows: the numerator is the lesser of fifty thousand dollars or excess 47 of New York adjusted gross income for the taxable year over one million 48 five hundred thousand dollars and the denominator is fifty thousand 49 dollars. This subparagraph shall apply only to the taxable years begin- 50 ning on or after January first, two thousand twenty-one and before Janu- 51 ary first, two thousand [~~twenty-eight~~] twenty-two. 52 § 17. Subparagraph (E) of paragraph 3 of subsection (d-1) of section 53 601 of the tax law, as added by section 6 of part A of chapter 59 of the 54 laws of 2021, is amended to read as follows: 55 (E) The tax table benefit is the difference between (i) the amount of 56 taxable income set forth in the tax table in paragraph one of subsection

A. 8221--A 6 1 (a) of this section not subject to the 10.30 percent rate of tax for the 2 taxable year multiplied by such rate and (ii) the dollar denominated tax 3 for such amount of taxable income set forth in the tax table applicable 4 to the taxable year in paragraph one of subsection (a) of this section 5 less the sum of the tax table benefits in subparagraphs (A), (B) and (D) 6 of this paragraph. The fraction for this subparagraph is computed as 7 follows: the numerator is the lesser of fifty thousand dollars or excess 8 of New York adjusted gross income for the taxable year over five million 9 dollars and the denominator is fifty thousand dollars. This subparagraph 10 shall apply only to the taxable years beginning on or after January 11 first, two thousand twenty-one and before January first, two thousand 12 [~~twenty-eight~~] twenty-two. 13 § 18. Subparagraph (F) of paragraph 3 of subsection (d-1) of section 14 601 of the tax law, as added by section 6 of part A of chapter 59 of the 15 laws of 2021, is amended to read as follows: 16 (F) The tax table benefit is the difference between (i) the amount of 17 taxable income set forth in the tax table in paragraph one of subsection 18 (a) of this section not subject to the 10.90 percent rate of tax for the 19 taxable year multiplied by such rate and (ii) the dollar denominated tax 20 for such amount of taxable income set forth in the tax table applicable 21 to the taxable year in paragraph one of subsection (a) of this section 22 less the sum of the tax table benefits in subparagraphs (A), (B), (D) 23 and (E) of this paragraph. The fraction for this subparagraph is 24 computed as follows: the numerator is the lesser of fifty thousand 25 dollars or excess of New York adjusted gross income for the taxable year 26 over twenty-five million dollars and the denominator is fifty thousand 27 dollars. This subparagraph shall apply only to the taxable years begin- 28 ning on or after January first, two thousand twenty-one and before Janu- 29 ary first, two thousand [~~twenty-eight~~] twenty-two. 30 § 19. This act shall take effect immediately.

Enacts the "Invest in New Yorkers Act"

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