BILL NUMBER: S3943

SPONSOR: GOUNARDES
 
TITLE OF BILL:

An act to amend the tax law, in relation to personal income taxation of
pensions and annuities

 
PURPOSE:

This bill increases the amount of the New York State Personal Income Tax
subtraction for pensions and annuities.

 
SUMMARY OF PROVISIONS:

Section one of this bill amends Tax Law section 612(c)(3-a) to increase
the Personal Income Tax ("PIT") pensions and annuities subtraction from
$20,000 to $35,000, to the extent that the income is included in the
taxpayer's gross income for Federal income tax purposes and not
subtracted pursuant to 612(c)(3).

              

Section two of this bill provides that this act shall take effect Janu-
ary 1, 2020 and shall apply to taxable years beginning on and after such
date.

 
CURRENT LAW:

Tax Law section 612(c)(3-a) provides a $20,000 PIT subtraction for
pension and annuity income received by the taxpayer, to the extent that
the income is included in the taxpayer's gross income for Federal income
tax purposes and not subtracted pursuant to 612(c)(3).

 
JUSTIFICATION:

The current subtraction for pension and annuity income was enacted in
1981 (Chapters 183 and 1043). That was 37 years ago. Since that time,
this subtraction has not increased even though we have undergone
inflation every year.

According to the Federal Bureau of Labor Statistics, $20,000 in January
1981 has the same buying power as $57,864.83 in January 2019.  Unfortu-
nately, the Tax Law has not kept up with inflation.

This bill provides our retired taxpayers with more complete relief by
raising the amount of the pension and annuities subtraction to $35,000.
This amount is approximately the buying power that $20,000 1981 dollars
would have in 1991, which was the last time this subtraction was amended
by the Legislature.

In its' 2018 Annual Report, the Federal Pension Benefit Guarantee Corpo-
ration ("PBGC") stated "(s)ince 1974, PBGC has taken responsibility for
paying the benefits of about 1.5 million people in over 5,000 failed
single-employer and multi-employer plans. PBGC made benefit payments of
$5.9 billion in FY 2018." PBGC 2018 Annual Report, p. 2, retrieved from
https://www.plagc.govisites/default/files/pbgc -annual- report2018.pdf.
In 2018, the PBGC assumed responsibility for 58 terminated single-em-
ployer plans in which more than 28,000 people were members. By assuming
responsibility for these plans, the PBGC is guaranteeing that these
members will receive retirement benefits.  Unfortunately, due to maximum
payment limitations, members may not receive their full retirement bene-
fit.

Retirement plan underfunding and failures are no limited to single-em-
ployer plans. On December 31, 2016, the New York Times reported that the
New York State Teamsters Conference Pension and Retirement Fund had
enough money to fund 44.8% of its obligations.  Morgenson, Gretchen, New
York's Teamsters May Have Their Pensions Cut. What Went Wrong?, New York
Times, December 31, 2016, retrieved from
https://www.nytimes.com/2016/12/30/busines s/O1 cret-morgenson-
pensionsteamsters.html, on February 14, 2019. As CNN reported on May 7,
2018, retired members of the New York State Teamsters Conference Pension
and Retirement Fund had their pension benefits reduced by 29%. CNN Money
at https://money.cnn.com/2018/05/07/retirement/pension -fund-cuts-
teamsters/index.html, retrieved on February 14, 2019.

This legislation would help our retirees who are trying to make ends
meet.

 
LEGISLATIVE HISTORY:

New bill

 
FISCAL IMPLICATIONS:

To be determined

 
EFFECTIVE DATE:
This act shall take effect January 1, 2020 and shall apply to taxable
years beginning on and after such date.