Senate Bill S6236A

                                 BILL NUMBER:  S6236

 TITLE OF BILL :
An act to amend the tax law, in relation to providing an additional
franchise tax on certain life insurance policies

 PURPOSE :
Provides for an additional franchise tax on certain life insurance
policies.

 SUMMARY OF PROVISIONS :
Section 1. Imposes a fifty-percent (50%) tax on every company that has
a corporate franchise, or does business, or has employees or owns or
leases property, or maintains an office in this state and that
receives benefits from life insurance policies obtained on its
employees and/or retirees. Requires records to be kept in a form as
the Commissioner of Taxation and Finance may require. Provides that
the Commissioner of Taxation and Finance may consent to the
destruction of such records within three years or require that such
records be kept longer than three years.

Section 2.Effective Date

 JUSTIFICATION :
New York State currently faces a budget deficit of approximately $3
billion. The Governor has called for drastic mid-year spending cuts
              

totaling several billion dollars including $5.4 million in programs to
serve senior citizens, $43 million to the State Department of Health,
$10 million in the Office of Family and Children's Services, and $44
million to the State Department of Education and $24 million to SUNY.
Unfortunately, little or nothing has been done to find sources of
revenue to mitigate New York State's dire fiscal circumstances.

As New York State faces its worse fiscal crisis since the Great
Depression, corporations are reaping huge financial benefits from life
insurance policies they take out on their employees and or retirees.
Corporate owned life insurance, better known as "dead peasants" or
"janitors" insurance, is a life insurance policy that is taken out on
low-level employees, often without the knowledge or consent of the
employee, and whose families are not named as beneficiaries when the
employee or retiree dies. When the employee or retiree dies, these tax
free benefits are collected by the employer.  Furthermore, companies
frequently use these policies to pay for retirement benefits and other
perks for their top executives.  Companies that supposedly engage in
the practice of purchasing these policies include Wal-Mart, Dow
Chemical, Proctor & Gamble and Walt Disney.

One tragic example of this practice is that of a 48 year old assistant
manager at Wal-Mart who died of a massive heart attack. The man's
widow became the lead plaintiff in a class action suit after she
learned that Wal-Mart collected $300,000 from a life insurance policy
it owned on him.

This bill would impose a 50% tax on all benefits received by companies
in New York State who take out life insurance policies on their
employees or retirees.

 LEGISLATIVE HISTORY :
New bill.

 FISCAL IMPLICATIONS :
None.

 EFFECTIVE DATE :
On or after January 1, 2010.