senate Bill S3266

Amended

Creates the middle class circuit breaker tax credit and a tax reform study commission

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 31 / Jan / 2013
    • REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 08 / Jan / 2014
    • REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 24 / Jan / 2014
    • AMEND AND RECOMMIT TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 24 / Jan / 2014
    • PRINT NUMBER 3266A

Summary

Creates the middle class circuit breaker tax credit and a tax reform study commission.

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Bill Details

Versions:
S3266
S3266A
Legislative Cycle:
2013-2014
Current Committee:
Senate Investigations And Government Operations
Law Section:
Tax Law
Laws Affected:
Amd ยง606, Tax L
Versions Introduced in Previous Legislative Cycles:
2011-2012: S912B
2009-2010: S4239A

Sponsor Memo

BILL NUMBER:S3266

TITLE OF BILL: An act to amend the tax law, in relation to creating the
middle class circuit breaker tax credit and creating a tax reform study
commission

PURPOSE OR GENERAL IDEA OF BILL: To provide a personal income tax cred-
it for certain property taxpayers who pay a disproportionate share of
their income to property taxes.

SUMMARY OF SPECIFIC PROVISIONS: SECTION 1: Adds a new subsection (vv)
to section 606 of the tax law to provide for a real property tax credit.
The credit will be based on the income of the household and the percent-
age that said household pays for real property taxes.

FOR HOMEOWNERS

For taxable years starting in 2014:
Household Adjusted Gross Income Tax Maximum Real Property Tax

$100,000 or less Real Property taxes paid in
excess of 9% of said income
can receive a personal income
tax credit of 70% of the overage.

$100,001 + No credit.

For taxable years starting in 2014:
Household Adjusted Gross
Income Tax Maximum Real Property Tax

$100,000 or less Real Property taxes paid
in excess of 8.5% of said
income can receive
a personal income tax credit
of 70% of the overage.

$100,001 + No credit.

For taxable years starting in 2015:
Household Adjusted Gross Income Tax Maximum Real Property Tax

$100,000 or less Real Property taxes paid in
excess of 7.5% of said income
can receive a personal income
tax credit of 70% of the overage.

$100,001 - $150,000 Real Property taxes paid in
excess of 7.5% of the first
$100,000 of said income PLUS
8.5% of said income above

$100,000 can receive a personal
income tax credit of 70% of the
overage.

$150,001 + No credit.
For taxable years starting in 2016:
Household Adjusted Gross
Income Tax Maximum Real Property Tax

$100,000 or less Real Property taxes paid
in excess of 6% of said
income can receive a
personal income tax credit
of 70% of the overage.

$100,001 - $150,000 Real Property taxes paid in
excess of 6% if the first
$100,000 of said income
PLUS 7% of said income above
$100,000 can receive a personal
income tax credit of 70% of
of the overage.

$150,001 - $250,000 Real Property taxes paid in
excess of 6% of the first
$100,000 of said income
PLUS 7% of the next $50,000
of said income PLUS 8.5%
of said income above
$150,000 can receive a
personal income tax credit
of 70% of the overage.

$250,000 + No credit.

To qualify, the taxpayer must have resided in the home for not less than
five years. Also, the taxpayer may still benefit from the Basic STAR
exemption or the Enhanced STAR exemption for senior citizens. The cred-
it will equal seventy percent of the taxes paid over the allowed
percentage cap as provided in the bill.

The act would also provide for a "real property tax equivalent" in the
case of taxpayers who rent real property as their primary New York State
residence.

For taxable years starting in 2014 the "real property tax equivalent"
equal to 15% of the adjusted rent actually paid in the taxable year.
taxable years starting in 2016, the amount is increased to 20% of the
adjusted rent actually paid in the taxable year.

SECTION 2: Creates a tax reform study commission with appointments from
the Senate, Assembly and the Executive. The commission will review the
state's existing property tax reform programs as well as programs
enacted in other states.

SECTION 3: Contains the effective date.

JUSTIFICATION: The middle class property tax circuit breaker program is
a concept that has successfully been used in several states to Provide
relief from a residential homeowner's property tax when it exceeds a
certain portion of their household income. It has been traditionally
Used for homeowners with very low incomes and low assessments. New York
State currently has a circuit breaker provision that has existed for
decades, but the maximum eligible household income is $18,000 and the
maximum eligible home value is $85,000. This new program would target
middle-class New Yorkers who have financially suffered as municipalities
have had to rely more heavily on real property taxes for local govern-
ment revenue. Many homeowners are facing sky-racking real property tax
bills as a result they are often faced with the serious threat of
defaulting on their property taxes and/or seriously consider selling
their homes.

Critics of the New York's STAR program have claimed that it is inequita-
ble because it does not draw a connection between a taxpayer's household
income and the amount of his tax bill. The Middle Class STAR Rebate
Checks program, which began in 1970 and was eliminated in 2009,
compounded this effect because it calculated a household's rebate amount
as a percentage of the value of its STAR exemption. This legislation
seeks to resolve these limitations and remain sensitive to the State's
current financial crisis. Additionally, the bill would add progressivi-
ty to property tax relief and extend the benefits to property renters
who are often burdened with property taxes in the cost of their rent.
The bill is phased in over four years in order to take the state's
fiscal situation into consideration while ensuring that the most over-
burdened property taxpayers, based on the percentage of income they are
paying in property tax on their home, will get relief quickly.

FISCAL IMPLICATIONS: The program is phased in over four years and will
cost the State nothing in the first year. For year two the cost will be
$1.1 billion; year three will cost $1.8 billion and every year after
will cost $2.3 billion.

EFFECTIVE DATE: Immediately after enactment.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  3266

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            January 31, 2013
                               ___________

Introduced by Sens. KRUEGER, MONTGOMERY -- read twice and ordered print-
  ed,  and  when  printed  to  be committed to the Committee on Investi-
  gations and Government Operations

AN ACT to amend the tax law, in relation to creating  the  middle  class
  circuit breaker tax credit and creating a tax reform study commission

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Section 606 of the tax law  is  amended  by  adding  a  new
subsection (vv) to read as follows:
  (VV)  MIDDLE  CLASS  CIRCUIT  BREAKER CREDIT. (1) DEFINITIONS. FOR THE
PURPOSES OF THIS SUBSECTION:
  (A) "QUALIFIED TAXPAYER" MEANS A RESIDENT INDIVIDUAL OF THE STATE  WHO
OWNS  OR RENTS THE RESIDENTIAL REAL PROPERTY IN WHICH HE OR SHE RESIDES,
AND HAS RESIDED IN SUCH RESIDENTIAL REAL PROPERTY FOR NOT LESS THAN FIVE
YEARS.
  (B) "HOUSEHOLD" OR  "MEMBERS  OF  THE  HOUSEHOLD"  MEANS  A  QUALIFIED
TAXPAYER  OR  QUALIFIED TAXPAYERS AND ALL OTHER PERSONS, NOT NECESSARILY
RELATED, WHO ALL RESIDE IN THE RESIDENTIAL REAL PROPERTY  OWNED  BY  THE
TAXPAYER  OR TAXPAYERS, AND SHARE ITS FURNISHINGS, FACILITIES AND ACCOM-
MODATIONS; PROVIDED THAT NO PERSON MAY BE A  MEMBER  OF  MORE  THAN  ONE
HOUSEHOLD AT ONE TIME.
  (C) "HOUSEHOLD GROSS INCOME" MEANS THE AGGREGATE ADJUSTED GROSS INCOME
OF  ALL  MEMBERS  OF  THE HOUSEHOLD FOR THE TAXABLE YEAR AS REPORTED FOR
FEDERAL INCOME TAX PURPOSES, OR WHICH  WOULD  BE  REPORTED  AS  ADJUSTED
GROSS  INCOME  IF A FEDERAL INCOME TAX RETURN WERE REQUIRED TO BE FILED,
WITH THE MODIFICATIONS IN SUBSECTION (B) OF SECTION SIX  HUNDRED  TWELVE
OF  THIS ARTICLE BUT WITHOUT THE MODIFICATIONS IN SUBSECTION (C) OF SUCH
SECTION, PLUS ANY PORTION OF THE GAIN FROM THE SALE OR EXCHANGE OF PROP-
ERTY OTHERWISE EXCLUDED FROM SUCH AMOUNT;  EARNED  INCOME  FROM  SOURCES
WITHOUT  THE  UNITED  STATES  EXCLUDABLE  FROM  FEDERAL  GROSS INCOME BY
SECTION NINE HUNDRED ELEVEN OF THE INTERNAL REVENUE CODE; SUPPORT  MONEY

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD01851-01-3

S. 3266                             2

NOT  INCLUDED  IN  ADJUSTED  GROSS  INCOME;  NONTAXABLE STRIKE BENEFITS;
SUPPLEMENTAL SECURITY INCOME PAYMENTS; THE GROSS AMOUNT OF  ANY  PENSION
OR  ANNUITY  BENEFITS  TO THE EXTENT NOT INCLUDED IN SUCH ADJUSTED GROSS
INCOME  (INCLUDING, BUT NOT LIMITED TO, RAILROAD RETIREMENT BENEFITS AND
ALL PAYMENTS RECEIVED UNDER THE FEDERAL SOCIAL SECURITY ACT  AND  VETER-
ANS'  DISABILITY  PENSIONS); NONTAXABLE INTEREST RECEIVED FROM THE STATE
OF NEW YORK, ITS AGENCIES, INSTRUMENTALITIES,  PUBLIC  CORPORATIONS,  OR
POLITICAL  SUBDIVISIONS (INCLUDING A PUBLIC CORPORATION CREATED PURSUANT
TO AGREEMENT OR COMPACT WITH ANOTHER STATE OR CANADA); WORKERS'  COMPEN-
SATION;  THE GROSS AMOUNT OF "LOSS-OF-TIME" INSURANCE; AND THE AMOUNT OF
CASH PUBLIC ASSISTANCE AND RELIEF, OTHER THAN MEDICAL ASSISTANCE FOR THE
NEEDY, PAID TO OR FOR THE BENEFIT OF THE QUALIFIED TAXPAYER  OR  MEMBERS
OF  HIS  OR  HER  HOUSEHOLD.  HOUSEHOLD GROSS INCOME SHALL   NOT INCLUDE
SURPLUS FOODS OR OTHER RELIEF IN KIND OR PAYMENTS  MADE  TO  INDIVIDUALS
BECAUSE  OF  THEIR  STATUS  AS VICTIMS OF NAZI PERSECUTION AS DEFINED IN
PUBLIC LAW 103-286 OR ANY DISABILITY COMPENSATION RECEIVED  BY  VETERANS
ON  ACCOUNT  OF INJURY OR ILLNESS INCURRED OR AGGRAVATED DURING MILITARY
SERVICE IN THE WARS IN AFGHANISTAN AND IRAQ  SINCE  SEPTEMBER  ELEVENTH,
TWO  THOUSAND ONE.  PROVIDED, FURTHER, HOUSEHOLD GROSS INCOME SHALL ONLY
INCLUDE ALL SUCH INCOME RECEIVED BY ALL MEMBERS OF THE  HOUSEHOLD  WHILE
MEMBERS OF SUCH HOUSEHOLD.
  (D)  "ADJUSTED  RENT"  MEANS RENT PAID FOR THE RIGHT OF OCCUPANCY OF A
RESIDENCE.
  (E) "REAL PROPERTY TAX EQUIVALENT" MEANS (1) FOR TAXABLE YEARS  BEGIN-
NING  IN  TWO  THOUSAND  FOURTEEN,  FIFTEEN PERCENT OF THE ADJUSTED RENT
ACTUALLY PAID IN THE TAXABLE YEAR BY A HOUSEHOLD SOLELY FOR THE RIGHT OF
OCCUPANCY OF ITS NEW YORK RESIDENCE FOR THE TAXABLE YEAR. IF (I) A RESI-
DENCE IS RENTED TO TWO OR MORE INDIVIDUALS AS COTENANTS, OR  SUCH  INDI-
VIDUALS SHARE IN THE PAYMENT OF A SINGLE RENT FOR THE RIGHT OF OCCUPANCY
OF  SUCH RESIDENCE, AND (II) EACH OF SUCH INDIVIDUALS  IS A MEMBER OF  A
DIFFERENT HOUSEHOLD, ONE OR MORE OF WHICH INDIVIDUALS SHARES SUCH  RESI-
DENCE,  REAL  PROPERTY TAX EQUIVALENT IS THAT PORTION OF FIFTEEN PERCENT
OF THE ADJUSTED RENT PAID  IN  THE  TAXABLE  YEAR  WHICH  REFLECTS  THAT
PORTION  OF  THE  RENT  ATTRIBUTABLE  TO  THE QUALIFIED TAXPAYER AND THE
MEMBERS OF HIS OR HER HOUSEHOLD; AND (2) FOR TAXABLE YEARS BEGINNING  IN
TWO THOUSAND SIXTEEN AND THEREAFTER, TWENTY PERCENT OF THE ADJUSTED RENT
ACTUALLY  PAID  IN THE TAXABLE YEAR  BY A HOUSEHOLD SOLELY FOR THE RIGHT
OF OCCUPANCY OF ITS NEW YORK RESIDENCE FOR THE TAXABLE YEAR.  IF  (I)  A
RESIDENCE  IS  RENTED  TO  TWO OR MORE INDIVIDUALS AS COTENANTS, OR SUCH
INDIVIDUALS SHARE IN THE PAYMENT OF A SINGLE RENT FOR THE RIGHT OF OCCU-
PANCY OF SUCH RESIDENCE, AND (II) EACH OF SUCH INDIVIDUALS IS  A  MEMBER
OF  A  DIFFERENT HOUSEHOLD, ONE OR MORE OF WHICH INDIVIDUALS SHARES SUCH
RESIDENCE, REAL PROPERTY  TAX  EQUIVALENT  IS  THAT  PORTION  OF  TWENTY
PERCENT  OF  THE  ADJUSTED  RENT PAID IN THE TAXABLE YEAR WHICH REFLECTS
THAT PORTION OF THE RENT ATTRIBUTABLE TO THE QUALIFIED TAXPAYER AND  THE
MEMBERS OF HIS OR HER HOUSEHOLD.
  (F)  "NET REAL PROPERTY TAX" MEANS THE REAL PROPERTY TAXES ASSESSED ON
THE RESIDENTIAL REAL PROPERTY OWNED AND  OCCUPIED  BY  THE  TAXPAYER  OR
TAXPAYERS AFTER ANY EXEMPTION OR ABATEMENT RECEIVED PURSUANT TO THE REAL
PROPERTY TAX LAW.
  (2) CREDIT. A QUALIFIED TAXPAYER SHALL BE ALLOWED A CREDIT AGAINST THE
TAXES IMPOSED BY THIS ARTICLE, EQUAL TO SEVENTY PERCENT OF THE AMOUNT BY
WHICH  THE TAXPAYER'S NET REAL PROPERTY TAX OR THE TAXPAYER'S REAL PROP-
ERTY TAX EQUIVALENT EXCEEDS THE TAXPAYER'S MAXIMUM REAL PROPERTY TAX, AS
DETERMINED BY PARAGRAPH THREE OF THIS SUBSECTION. IF SUCH CREDIT EXCEEDS
THE TAX FOR SUCH TAXABLE YEAR, AS REDUCED BY THE OTHER CREDITS PERMITTED

S. 3266                             3

BY THIS ARTICLE, THE QUALIFIED  TAXPAYER  MAY  RECEIVE,  AND  THE  COMP-
TROLLER,  SUBJECT  TO  A  CERTIFICATE OF THE DEPARTMENT, SHALL PAY AS AN
OVERPAYMENT, WITHOUT INTEREST, ANY EXCESS BETWEEN SUCH TAX AS SO REDUCED
AND THE AMOUNT OF THE CREDIT. IF A QUALIFIED TAXPAYER IS NOT REQUIRED TO
FILE A RETURN PURSUANT TO SECTION SIX HUNDRED FIFTY-ONE OF THIS ARTICLE,
A  QUALIFIED  TAXPAYER  MAY  NEVERTHELESS  RECEIVE  AND THE COMPTROLLER,
SUBJECT TO A CERTIFICATE OF THE DEPARTMENT, SHALL PAY AS AN  OVERPAYMENT
THE FULL AMOUNT OF THE CREDIT, WITHOUT INTEREST.
  (3) MAXIMUM REAL PROPERTY TAX. (A) A QUALIFIED TAXPAYER'S MAXIMUM REAL
PROPERTY TAX SHALL BE DETERMINED AS FOLLOWS:
  (I) FOR TAX YEARS BEGINNING IN TWO THOUSAND FOURTEEN:
HOUSEHOLD GROSS INCOME               MAXIMUM REAL PROPERTY TAX
ONE HUNDRED THOUSAND                 NINE PERCENT OF THE
DOLLARS OR LESS                      HOUSEHOLD GROSS INCOME
MORE THAN ONE HUNDRED                NO LIMITATION.
THOUSAND DOLLARS

  (II) FOR TAX YEARS BEGINNING IN TWO THOUSAND FIFTEEN:
HOUSEHOLD GROSS INCOME               MAXIMUM REAL PROPERTY TAX
ONE HUNDRED THOUSAND                 EIGHT AND ONE-HALF PERCENT OF THE
DOLLARS OR LESS                      HOUSEHOLD GROSS INCOME
MORE THAN ONE HUNDRED                NO LIMITATION.
THOUSAND DOLLARS

  (III) FOR TAX YEARS BEGINNING IN TWO THOUSAND SIXTEEN:
HOUSEHOLD GROSS INCOME               MAXIMUM REAL PROPERTY TAX
ONE HUNDRED THOUSAND DOLLARS         SEVEN AND ONE-HALF PERCENT OF
OR LESS                              HOUSEHOLD GROSS INCOME
MORE THAN ONE HUNDRED THOUSAND       SEVEN AND ONE-HALF PERCENT OF
DOLLARS, BUT LESS THAN OR EQUAL TO   ONE HUNDRED THOUSAND DOLLARS
ONE HUNDRED FIFTY THOUSAND DOLLARS   PLUS EIGHT AND ONE-HALF PERCENT OF
                                     HOUSEHOLD GROSS INCOME ABOVE
                                     ONE HUNDRED THOUSAND DOLLARS
MORE THAN ONE HUNDRED FIFTY          NO LIMITATION.
THOUSAND DOLLARS

  (IV) FOR TAX YEARS BEGINNING IN TWO THOUSAND SEVENTEEN AND THEREAFTER:
HOUSEHOLD GROSS INCOME               MAXIMUM REAL PROPERTY TAX
ONE HUNDRED THOUSAND                 SIX PERCENT OF HOUSEHOLD GROSS
DOLLARS OR LESS                      INCOME
MORE THAN ONE HUNDRED THOUSAND       SIX PERCENT OF ONE HUNDRED
DOLLARS, BUT LESS THAN OR EQUAL TO   THOUSAND DOLLARS PLUS SEVEN
ONE HUNDRED FIFTY THOUSAND DOLLARS   PERCENT OF HOUSEHOLD GROSS INCOME
                                     ABOVE ONE HUNDRED THOUSAND DOLLARS
MORE THAN ONE HUNDRED FIFTY          SIX PERCENT OF ONE HUNDRED THOUSAND
THOUSAND DOLLARS, BUT LESS THAN      DOLLARS PLUS SEVEN
OR EQUAL TO TWO HUNDRED FIFTY        PERCENT OF FIFTY THOUSAND DOLLARS
THOUSAND DOLLARS                     PLUS EIGHT AND ONE-HALF PERCENT OF
                                     HOUSEHOLD GROSS INCOME ABOVE ONE
                                     HUNDRED FIFTY THOUSAND DOLLARS
MORE THAN TWO HUNDRED FIFTY          NO LIMITATION.
THOUSAND DOLLARS
  (B)  THE  THRESHOLDS  OF  HOUSEHOLD GROSS INCOME ESTABLISHED BY CLAUSE
(IV) OF  SUBPARAGRAPH  (A)  OF  THIS  PARAGRAPH  SHALL  BE  INDEXED  FOR
INFLATION FOR TAX YEARS BEGINNING IN TWO THOUSAND EIGHTEEN AND THEREAFT-
ER.

S. 3266                             4

  (4) EXCLUSIONS FROM ELIGIBILITY. NO CREDIT SHALL BE GRANTED UNDER THIS
SUBSECTION  IF  THE  QUALIFIED  TAXPAYER  CLAIMS  THE  REAL PROPERTY TAX
CIRCUIT BREAKER CREDIT, PURSUANT TO  SUBSECTION  (E)  OF  THIS  SECTION,
DURING THE TAXABLE YEAR.
  S  2.  There  is  hereby  established a tax reform study commission to
provide the governor and the  legislature  with  a  long  run  plan  for
reforming  the state and local tax systems. The tax reform study commis-
sion shall consist of five  members  appointed  by  the  governor,  four
members  each appointed by the speaker of the assembly and the temporary
president of the senate, and one member each appointed by  the  minority
leader  of  the senate and the minority leader of the assembly. In addi-
tion, on or before January 1, 2016,  the  tax  reform  study  commission
shall  provide  the governor and the legislature with recommendations on
any changes that should be made in the definitions of income used in the
various property tax relief programs authorized by the laws of the state
of New York. Such recommendations shall be based on  an  examination  of
such  laws and of such laws in other states. In preparing such recommen-
dations, the tax reform study commission shall review the distributional
impact of the items of income included in the  definition  of  household
income for purposes of the circuit breaker and other property tax relief
programs established by state law and make recommendations to the gover-
nor and the legislature for any changes in any of these definitions that
the  tax  reform study commission deems appropriate. The commissioner of
taxation and finance and the director of the  office  of  real  property
services  shall  provide  the tax reform study commission with such data
and analysis as it may require.
  S 3. This act shall take effect immediately.

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