senate Bill S4548A

Authorizes cities having a population of one million or more, which impose a personal income tax, to grant a household and dependent care services credit when necessary for gainful employment

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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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  • 10 / Apr / 2013
    • REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 08 / Jan / 2014
    • REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 13 / Jan / 2014
    • AMEND AND RECOMMIT TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
  • 13 / Jan / 2014
    • PRINT NUMBER 4548A

Summary

Authorizes cities having a population of one million or more, which impose a personal income tax, to grant a household and dependent care services credit when necessary for gainful employment.

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Bill Details

See Assembly Version of this Bill:
A6764B
Versions:
S4548
S4548A
Legislative Cycle:
2013-2014
Current Committee:
Senate Investigations And Government Operations
Law Section:
Tax Law
Laws Affected:
Amd ยง1310, Tax L

Sponsor Memo

BILL NUMBER:S4548A

TITLE OF BILL: An act to amend the tax law, in relation to a credit
against personal income taxes imposed by certain cities for certain
household and dependent care services necessary for gainful employment

PURPOSE:

To expand the New York City child care credit to the entire middle
class. The credit is intended to offset the cost of child care for
working parents or parents looking for work.

SUMMARY OF PROVISIONS:

This bill would amend Section 1310 of the tax law by adding a new
subsection (g) to create a credit for certain household and dependent
care services for gainful employment. Paragraph l of new subsection
(g) would allow, beginning January 1, 2013, New York City to create,
by local law, a credit against the City's personal income tax. New
York City's credit would be limited to qualifying individuals who also
claimed the State's credit for certain household and dependent care
services necessary for gainful employment with respect to children who
have not yet reached the age of 4.

The credit would be equal to the applicable percentage of the Federal
credit for expenses for household and dependent care services
necessary for gainful employment. The applicable percentage of the
Federal Credit would be as follows:

(A) For incomes $45,000 or less, the credit is 90%.
(B) For incomes between $45,001 and $60,000, the credit phases down
from 90% to 50%.
(C) For incomes between $60,001 and $150,000, the credit is 50%.
(D) For incomes between S150,001 and $175,000, the credit phases down
from 50% to zero.
(E) For incomes of $175,001 or more, the credit is zero.

Paragraph 2 of new subsection (g) provides that such credit is
refundable, and shall be applied after all other credits against the
City personal income tax have been taken. For part year residents, the
credit will be prorated based on the length of time the taxpayer was a
resident of New York City.

Paragraph 3 of new subsection (g) provides that for married couples
who filed a joint federal return, but are required to file their City
taxes separately, then the credit shall be imposed on the spouse with
the lower income. If the spouse with the lower income is not resident
of the City, then no credit shall be given. The credit will only be
applicable to taxpayers who file a New York City return.

Paragraph 4 of new subsection (g) provides that the local law adopted
pursuant to this act shall only be authorized to provide the credit
for 3.5 consecutive calendar years, and that the credit can only apply
between July 1, 2013 and December 31, 2016. Credits provided in 2013
will be prorated on the basis of the number of days remaining in the
calendar year.


Section 2 of the bill provides that the act would take effect
immediately.

JUSTIFICATION:

Child care is a necessity for many working, families. For unemployed
parents, lack of child care is a handicap in looking for work. On
average, families with a child under the age of 5 will spend over
$9,000 per year on child care. This represents around 10.4 percent of
family income. For lower income families earning between $18,000 and
$36,000 annually, this can represent 20.4 percent of family income.
The recent New York City Council study "The Middle Class Squeeze"
describes how middle income households in the City are struggling at
an unprecedented extent with reduced employment opportunities, higher
education requirements and astronomical costs. According to the
Council for Community and Economic Research, Manhattan and Brooklyn
ranked first and second place among the top 10 most expensive
metropolitan areas in the U.S. Queens achieved fifth place.

The Federal and State governments have their own child care credits
that help. Together these programs can provide up to $2,200 per child
or dependent to offset allowable costs of care. This is inadequate
relative to the need, especially in a high cost state like New York.
All the more so because the Federal credit is not refundable, which
means low income families are typically unable to use the credit.

For the Federal Credit, a portion of the qualified expenses is
credited against personal income tax liability. Qualified expenses
currently range from $3,000 to $6,000 depending on whether one or more
children (or dependents) are present in the household. The portion of
expenses that can be deducted is based on income.

The current Federal credit equals 35 percent of allowable expenses at
an income of $15,000, and phases down to 20 percent at incomes over
$43,000. Using the same rules for allowable expenses, the State credit
is now 110 percent of the Federal credit for earnings under $25,000,
and declines gradually to 20 percent of the Federal credit at incomes
over 565,000. Close to 220,000 New York City families received the New
York State credit in 2010.

Like the State program, the City credit is a refundable credit. The
City credit is currently 75 percent of the State credit for incomes of
$25,000 or less, and phases down to zero at $30,000. Consequently,
middle and lower-middle income families are entirely excluded from
receiving a City credit. Because of the limited income range covered
by the credit, only 23,500 New York City families received the credit
in 2010.

The proposed expansion of the City credit would continue focusing the
credit on children up through age 3, since child care is most
expensive during those early years and many school and preschool
programs are only available at ages 4 and older. The credit will now
be expanded to cover middle income households, and will be increased
for those households already receiving it. An estimated 102,800
families are expected to receive the City credit. The credit will be
90 percent of the Federal credit for adjusted gross incomes of $45,000
or less, phasing down to 50 percent of the Federal credit at $60,000.


It remains at 50 percent for adjusted gross incomes of up to $150,000,
and then phases down to zero at $175,000.

The proposed credit will be fully refundable. Families with incomes
under $30,000 eligible for the existing New York City credit will do
better under the proposed credit.

The example below shows how adding the New York City credit will
enhance support for working families:

Examples:

1: One child, $35,000 income
Expenses= $3,000
City credit = $675

2: Two children, $85,000 income
Expenses=$6,000
City credit= $ 600

LEGISLATIVE HISTORY:

None.

FISCAL IMPLICATIONS:

None to the state.

LOCAL FISCAL IMPLICATIONS:

The expansion of the credit would cost New York City approximately $32
million for the full calendar year.

EFFECTIVE DATE:

This act shall take effect immediately.

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

                                 4548--A

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                             April 10, 2013
                               ___________

Introduced  by  Sen.  FELDER -- read twice and ordered printed, and when
  printed to be committed to the Committee on Investigations and Govern-
  ment Operations -- recommitted to the Committee on Investigations  and
  Government  Operations  in  accordance  with  Senate Rule 6, sec. 8 --
  committee discharged, bill amended, ordered reprinted as  amended  and
  recommitted to said committee

AN  ACT  to  amend the tax law, in relation to a credit against personal
  income taxes imposed by  certain  cities  for  certain  household  and
  dependent care services necessary for gainful employment

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

  Section 1. Section 1310 of the tax law is  amended  by  adding  a  new
subsection (g) to read as follows:
  (G) CREDIT FOR CERTAIN HOUSEHOLD AND DEPENDENT CARE SERVICES NECESSARY
FOR  GAINFUL  EMPLOYMENT. (1) NOTWITHSTANDING ANY OTHER PROVISION OF LAW
TO THE CONTRARY, ANY CITY HAVING A POPULATION OF ONE  MILLION  OR  MORE,
ACTING  THROUGH  ITS LOCAL LEGISLATIVE BODY, IS AUTHORIZED AND EMPOWERED
TO ADOPT AND AMEND LOCAL LAWS GRANTING IN SUCH CITY, ON OR AFTER TAXABLE
YEARS BEGINNING JANUARY FIRST, TWO THOUSAND FOURTEEN, A  CREDIT  AGAINST
THE  CITY  PERSONAL INCOME TAX EQUAL TO THE APPLICABLE PERCENTAGE OF THE
CREDIT ALLOWED UNDER PARAGRAPH TWO OF SUBSECTION (A) OF SECTION  TWENTY-
ONE OF THE INTERNAL REVENUE CODE (WITHOUT REGARD TO WHETHER THE TAXPAYER
IN FACT CLAIMED THE CREDIT UNDER SUCH SECTION TWENTY-ONE FOR THE TAXABLE
YEAR),  TO A TAXPAYER WHO CLAIMED A CREDIT PURSUANT TO SUBSECTION (C) OF
SECTION SIX HUNDRED SIX OF THIS CHAPTER FOR THE SAME TAXABLE YEAR,  WITH
RESPECT  TO  QUALIFYING  INDIVIDUALS  AS  DEFINED  IN  PARAGRAPH  ONE OF
SUBSECTION (B) OF SECTION TWENTY-ONE OF THE INTERNAL REVENUE CODE (WITH-
OUT REGARD TO WHETHER THE TAXPAYER IN FACT CLAIMED THE CREDIT UNDER SUCH
SECTION TWENTY-ONE FOR THE TAXABLE  YEAR)  WHO  ARE  DEPENDENTS  OF  THE
TAXPAYER,  AND  WHO  HAVE  NOT ATTAINED THE AGE OF FOUR.  THE APPLICABLE
PERCENTAGE SHALL BE DETERMINED AS FOLLOWS:

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD10176-02-4

S. 4548--A                          2

  (A) IF HOUSEHOLD GROSS INCOME AS DEFINED IN SUBPARAGRAPH (A) OF  PARA-
GRAPH  THREE OF SUBDIVISION (B) OF SECTION 11-1706 OF THE ADMINISTRATIVE
CODE OF THE CITY OF NEW YORK IS FORTY-FIVE THOUSAND DOLLARS OR LESS, THE
APPLICABLE PERCENTAGE SHALL BE NINETY PERCENT.
  (B) IF SUCH HOUSEHOLD GROSS INCOME IS GREATER THAN FORTY-FIVE THOUSAND
DOLLARS  BUT  NOT  GREATER  THAN  SIXTY THOUSAND DOLLARS, THE APPLICABLE
PERCENTAGE SHALL BE FIFTY PERCENT PLUS  THE  PRODUCT  OF  FORTY  PERCENT
MULTIPLIED  BY  ONE  MINUS  A  FRACTION,  THE NUMERATOR OF WHICH IS SUCH
HOUSEHOLD GROSS INCOME LESS FORTY-FIVE THOUSAND DOLLARS AND THE  DENOMI-
NATOR OF WHICH IS FIFTEEN THOUSAND DOLLARS.
  (C)  IF  SUCH  HOUSEHOLD  GROSS  INCOME IS GREATER THAN SIXTY THOUSAND
DOLLARS BUT  NOT GREATER THAN ONE HUNDRED FIFTY  THOUSAND  DOLLARS,  THE
APPLICABLE PERCENTAGE SHALL BE FIFTY PERCENT.
  (D)  IF  SUCH HOUSEHOLD GROSS INCOME IS GREATER THAN ONE HUNDRED FIFTY
THOUSAND DOLLARS BUT NOT GREATER THAN ONE HUNDRED SEVENTY-FIVE  THOUSAND
DOLLARS,  THE APPLICABLE PERCENTAGE SHALL BE FIFTY PERCENT MULTIPLIED BY
ONE MINUS A FRACTION, THE NUMERATOR OF WHICH  IS  SUCH  HOUSEHOLD  GROSS
INCOME  LESS  ONE  HUNDRED FIFTY THOUSAND DOLLARS AND THE DENOMINATOR OF
WHICH IS TWENTY-FIVE THOUSAND DOLLARS.
  (E) IF SUCH HOUSEHOLD GROSS INCOME IS GREATER THAN ONE HUNDRED  SEVEN-
TY-FIVE THOUSAND DOLLARS, THE APPLICABLE PERCENTAGE SHALL BE ZERO.
  (2)  THE  CREDIT  UNDER  THIS  SUBSECTION SHALL BE ALLOWED AGAINST THE
TAXES IMPOSED BY THIS ARTICLE REDUCED BY THE CREDITS PERMITTED  BY  THIS
ARTICLE.   IF THE CREDIT EXCEEDS THE TAX AS SO REDUCED, THE TAXPAYER MAY
RECEIVE, AND THE STATE COMPTROLLER, SUBJECT TO THE  CERTIFICATE  OF  THE
COMMISSIONER,  SHALL PAY AS AN OVERPAYMENT, WITHOUT INTEREST, THE AMOUNT
OF SUCH EXCESS, PROVIDED, HOWEVER, IN THE CASE OF A TAXPAYER  WHO  IS  A
PART-YEAR RESIDENT OF THE CITY ANY SUCH OVERPAYMENT UNDER THIS PARAGRAPH
SHALL  BE LIMITED TO THE AMOUNT OF SUCH EXCESS MULTIPLIED BY A FRACTION,
THE NUMERATOR OF WHICH IS FEDERAL ADJUSTED GROSS INCOME FOR  THE  PERIOD
OF  RESIDENCE,  COMPUTED  AS  IF THE TAXABLE YEAR FOR FEDERAL INCOME TAX
PURPOSES WERE LIMITED TO THE PERIOD OF RESIDENCE, AND THE DENOMINATOR OF
WHICH IS FEDERAL ADJUSTED GROSS INCOME FOR THE TAXABLE YEAR.
  (3) IN THE CASE OF A MARRIED COUPLE WHO FILED A JOINT FEDERAL  RETURN,
BUT WHO ARE REQUIRED TO DETERMINE THEIR CITY TAXES SEPARATELY, THE CRED-
IT  ALLOWED  PURSUANT TO THIS SUBSECTION MAY ONLY BE APPLIED AGAINST THE
TAX IMPOSED ON THE SPOUSE WITH THE LOWER TAXABLE INCOME, COMPUTED  WITH-
OUT  REGARD  TO  SUCH  CREDIT, PROVIDED, HOWEVER, IF THE SPOUSE WITH THE
LOWER TAXABLE INCOME IS A NONRESIDENT OF SUCH CITY, NO CREDIT  SHALL  BE
ALLOWED  UNDER  THIS SUBSECTION. IN THE CASE OF A MARRIED COUPLE WHO ARE
NOT REQUIRED TO FILE A FEDERAL RETURN, THE CREDIT UNDER THIS  SUBSECTION
SHALL  BE  ALLOWED  ONLY  IF SUCH TAXPAYERS FILE A JOINT CITY INCOME TAX
RETURN.
  (4) ANY LOCAL LAW ADOPTED PURSUANT TO THIS SUBSECTION MAY PROVIDE  FOR
A  CREDIT  AS  AUTHORIZED  BY THIS SUBSECTION FOR A MAXIMUM OF THREE AND
ONE-HALF CONSECUTIVE CALENDAR YEARS; PROVIDED, HOWEVER,  THAT  ANY  SUCH
CREDIT  MAY  NOT APPLY BEFORE JULY FIRST, TWO THOUSAND FOURTEEN OR AFTER
TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST,  TWO  THOUSAND  EIGH-
TEEN;  PROVIDED  FURTHER,  HOWEVER,  THAT  ANY  CREDIT PERMITTED BY THIS
SUBSECTION TO A TAXPAYER IN THE TAXABLE YEAR BEGINNING ON JANUARY FIRST,
TWO THOUSAND FOURTEEN, SHALL BE PRORATED ON THE BASIS OF THE  NUMBER  OF
DAYS REMAINING IN THE CALENDAR YEAR OF SUCH TAXABLE YEAR.
  S 2. This act shall take effect immediately.

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