Public Hearing - February 09, 2023

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 2  ------------------------------------------------------


 4             In the Matter of the
            2023-2024 EXECUTIVE BUDGET
 5                   ON TAXES 
 6  ------------------------------------------------------

 7                              Hearing Room B
                                Legislative Office Building
 8                              Albany, New York
 9                              February 9, 2023
                                3:16 p.m.  


12            Senator Liz Krueger 
              Chair, Senate Finance Committee
              Assemblywoman Helene E. Weinstein
14            Chair, Assembly Ways & Means Committee

16            Senator Thomas F. O'Mara
              Senate Finance Committee (RM)
              Assemblyman Edward P. Ra 
18            Assembly Ways & Means Committee (RM)
19            Assemblywoman Jaime R. Williams 
              Chair, Committee on Real Property Taxation
              Senator Andrew Gounardes
21            Chair, Senate Committee on Revenue and Budget
22            Assemblyman Brian D. Miller
23            Senator Dean Murray


 1  2023-2024 Executive Budget
 2  2-9-23
 3  PRESENT:  (Continued)
 4            Assemblywoman Inez E. Dickens
 5            Assemblyman Erik M. Dilan
 6            Assemblywoman MaryJane Shimsky 
 7            Assemblyman Brian Manktelow
 8            Assemblyman Zohran K. Mamdani
 9            Assemblyman John T. McDonald III
10            Senator Peter Oberacker
11            Assemblyman Kenneth Zebrowski












 1  2023-2024 Executive Budget
 2  2-9-23
 4                     LIST OF SPEAKERS
 5                                       STATEMENT   QUESTIONS
 6  Amanda Hiller 
    Acting Commissioner
 7  NYS Department of Taxation
     and Finance                              8            15
    Emily Eisner 
 9  Economics Ph.D.
    NYC Democratic Socialists
10   of America
11  Charles Khan
    Coordinator, State and
12   Local Tax Campaigns
    Center for Popular Democracy
13       -and-
    Nathan Gusdorf
14  Executive Director 
    Fiscal Policy Institute                94           105









 1                  CHAIRWOMAN WEINSTEIN:  Good afternoon.  

 2                  We are about to start the second 

 3           hearing of today, so good afternoon.  I am 

 4           Helene Weinstein, chair of the New York State 

 5           Assembly's Ways and Means Committee and 

 6           cochair of today's hearing.

 7                  Today we begin the fifth in a series 

 8           of hearings conducted by the joint fiscal 

 9           committees of the Legislature regarding the 

10           Governor's proposed budget for fiscal year 

11           2023-'24.  

12                  The hearings are conducted pursuant to 

13           the New York State Constitution and the 

14           Legislative Law.

15                  Today our joint committees will hear 

16           testimony regarding the Governor's proposed 

17           budget for Taxation.

18                  Let me take a moment now to introduce 

19           the members from the Assembly, and then 

20           Senator Krueger, the chair of Senate Finance, 

21           will introduce the members from her 

22           conference.

23                  So we have with us the chair of our 

24           Real Property Tax Committee, Assemblywoman 


 1           Williams, and then Committee Members Dickens, 

 2           Shimsky, Dilan, Zebrowski, and Mamdani.  And 

 3           Mr. McDonald, who was with us at the prior 

 4           hearing, is also here.

 5                  Senator Krueger?

 6                  CHAIRWOMAN KRUEGER:  Thank you so 

 7           much.  

 8                  I'm joined by Senator Gounardes, our 

 9           chair of Taxation and Budget.  

10                  And I'll ask my colleague, Senator Tom 

11           O'Mara, the ranker on Finance, to introduce 

12           his team.

13                  SENATOR O'MARA:  Thank you, 

14           Chairwoman.  

15                  We have Senator Dean Murray and 

16           Senator Peter Oberacker.

17                  CHAIRWOMAN WEINSTEIN:  Assemblyman Ra?  

18                  ASSEMBLYMAN RA:  Thank you.  

19                  We have Assemblyman Brian Miller, our 

20           ranker on the Real Property Tax Committee, 

21           and Assemblyman Manktelow, a member of the 

22           Ways and Means Committee.

23                  CHAIRWOMAN WEINSTEIN:  Thank you.  

24                  So just for those of us who -- those 


 1           people who have -- both witnesses and members 

 2           who haven't attended prior hearings, just a 

 3           reminder about ground rules.  Witnesses, the 

 4           governmental witness, our tax commissioner, 

 5           has 10 minutes.  Nongovernmental witnesses, 

 6           who will be in a panel later, have three 

 7           minutes each.

 8                  Then the time limits for questions and 

 9           answers after the presentations:  The chairs 

10           of the relevant committees will have 

11           10 minutes and a second round of three 

12           minutes, if needed.  The ranking members of 

13           these committees will get five minutes each.  

14           And all other members who are a member of the 

15           relevant committees will get three minutes 

16           each.

17                  Just a reminder to all the witnesses 

18           that your written testimony has been 

19           submitted to the legislators in advance, so 

20           we ask that you do not read your written 

21           testimony to us or you will find out that 

22           three minutes -- or 10 minutes -- goes 

23           awfully fast when you read, and you never get 

24           to your end.


 1                  And then just to the legislators who 

 2           are here, again, as we've said before, let 

 3           either myself or Senator Krueger know, or 

 4           your ranker know, if you wish to question a 

 5           witness or a panel of witnesses.  After the 

 6           opening remarks of each witness or panel, we 

 7           will be closing the list.  

 8                  And just for everyone, keep an eye on 

 9           the time clock, either the one that's just 

10           the count-down clock or the one that has the 

11           red -- we'll have the green light on when the 

12           time starts.  The yellow light will come on 

13           when there's a minute left, and you'll hear a 

14           beep.  And then the red light will be several 

15           beeps, and we will cut you off if you keep 

16           going.

17                  So with that, I'm pleased to 

18           welcome -- oh, and just in addition, for both 

19           witnesses and the participants and any 

20           audience members, there are no PowerPoint 

21           presentations, placards, or signs permitted 

22           in the hearing room by either witnesses or 

23           our colleagues.

24                  So now, with that, I'm happy to invite 


 1           the commissioner of Tax to -- the New York 

 2           State Department of Tax and Finance -- 

 3           actually you're still acting commissioner, 

 4           right?

 5                  ACTING COMMISSIONER HILLER:  Yes.

 6                  CHAIRWOMAN WEINSTEIN:  -- so Acting 

 7           Commissioner Amanda Hiller, who's the acting 

 8           commissioner and general counsel, to present 

 9           her testimony.  

10                  And you have 10 minutes, and then I'm 

11           sure there will be some questions.

12                  ACTING COMMISSIONER HILLER:  

13           Absolutely.  

14                  Can everyone hear me?  Is this okay?  

15           Yes?  Good.

16                  Good afternoon, Senator Krueger --

17                  CHAIRWOMAN WEINSTEIN:  Just hold it -- 

18           we've been having some issues with the mics.  

19           Just hold it --

20                  ACTING COMMISSIONER HILLER:  Closer?

21                  CHAIRWOMAN WEINSTEIN:  You got it.

22                  ACTING COMMISSIONER HILLER:  Closer 

23           closer?  Okay?  

24                  Good afternoon, Senator Krueger, 


 1           Assemblymember Weinstein, and members of the 

 2           fiscal and tax committees.  I'm Amanda 

 3           Hiller, acting commissioner and general 

 4           counsel at the Department of Taxation and 

 5           Finance.  Thank you for this opportunity to 

 6           discuss the department and Governor Hochul's 

 7           2024 Executive Budget.  

 8                  As we move forward to fiscal year '24, 

 9           there are plenty of risks on the horizon.  

10           U.S. real GDP fell two consecutive quarters 

11           in the first half of 2022, prompting concerns 

12           that the U.S. economy might already be in a 

13           recession.  Real GDP rebounded by 3.2 percent 

14           in the third quarter, but the recession fears 

15           persisted throughout the year.  

16                  To address inflation, the Federal 

17           Reserve tightened monetary policy at the 

18           fastest pace on record.  And the Division of 

19           Budget now expects the national economy to 

20           enter a downturn in 2023, constraining 

21           U.S. Real GDP growth to 0.5 percent this 

22           year.  

23                  Fortunately, Governor Hochul has 

24           positioned the state well.  We have an 


 1           $8.7 billion surplus, which is primarily due 

 2           to continued strength in tax receipts.  In 

 3           October 2021, the Governor committed to 

 4           building the state's reserves to ensure that 

 5           it could honor current commitments through 

 6           good times and bad.  The extraordinary gains 

 7           in tax receipts have been directed to 

 8           accomplish that goal.  By the end of fiscal 

 9           year '23, the state will have boosted its 

10           reserves by over $20 billion since fiscal 

11           year '20.  

12                  Even as tax receipts continue to show 

13           strength in the current year, DOB has 

14           downgraded its expectations for the economic 

15           outlook twice since the fiscal year '23 

16           Enacted Budget Financial Plan was published 

17           just nine months ago.  DOB is now forecasting 

18           a mild national recession in the first half 

19           of calendar year '23, with U.S. real output 

20           projected to decline, followed by a recovery 

21           in the latter half of the year.  

22                  At the state level, key economic 

23           drivers of tax receipts have been revised 

24           sharply downward.  Total wage growth is now 


 1           expected to slow to 2.4 percent through 

 2           fiscal year '23 and 2.3 percent in fiscal 

 3           year '24, significantly lower than the 

 4           May 2022 forecast.  In particular, bonus 

 5           income is expected to decline by 27 percent 

 6           from the fiscal year '22 peak.  

 7                  Governor Hochul recognizes these 

 8           economic trends and has proposed a 

 9           responsible budget that makes targeted 

10           investments in housing, crime prevention, and 

11           energy affordability, while also addressing 

12           the MTA "fiscal cliff" and maintaining other 

13           crucial funding and support for New Yorkers.   

14           The Governor's $24 billion commitment to 

15           education remains intact:  The budget fully 

16           phases in Foundation Aid and includes 

17           $125 million for pre-K and $250 million for 

18           learning loss tutoring programs.  There is 

19           also a $1 billion investment to provide 

20           healthcare, shelter, and other critical 

21           services to asylum seekers, and $1.3 billion 

22           in economic development incentives to grow 

23           our economy and provide opportunities for 

24           New Yorkers.  


 1                  Importantly, the Executive Budget 

 2           accomplishes all of this while remaining true 

 3           to Governor Hochul's pledge to not increase 

 4           income taxes on New Yorkers.  Many of the tax 

 5           proposals in this budget address issues of 

 6           equity and fairness, including ensuring that 

 7           homeowners receive any excess proceeds from 

 8           tax foreclosure auctions.  

 9                  This budget will also incentivize 

10           employers to help reduce the costs of daycare 

11           for working parents, and it will improve the 

12           effectiveness of tax credits for working 

13           farmers, who often struggle with liquidity 

14           due to the capital-intensive nature of 

15           farming.  

16                  We will also continue the current tax 

17           rate on those corporations making the most 

18           money, which even at this level remains 

19           competitive relative to rates in other states 

20           and, in particular, to our neighbors.  

21                  Other proposals in the budget conform 

22           us to federal law or clarify the intent of 

23           initiatives that the Governor and Legislature 

24           previously enacted together.  


 1                  This time last year I spoke of the 

 2           scale of Tax Department operations, a scale 

 3           that never ceases to impress me.  Last year 

 4           the 3,800 members of Team Tax processed 

 5           29 million tax filings and closed 

 6           825,000 audits, as we worked to collect 

 7           nearly $160 billion in state and local 

 8           revenue.   

 9                  These volumes are only possible 

10           because we have sophisticated information 

11           technology platforms.  These systems were 

12           world-class when they came online, but that 

13           was over 30 years ago.  Worse, the underlying 

14           technology is closer to 40 years old.  

15                  That's why I'm grateful to the 

16           Governor and the Legislature for continuing 

17           to support the state's efforts to stabilize 

18           and modernize the Tax Department's 

19           information technology. This critical IT 

20           modernization effort will also significantly 

21           improve the flexibility and interoperability 

22           of our systems, helping to ensure tax 

23           revenues are effectively collected and 

24           processed with fair and equitable outcomes 


 1           for all of the department's current and 

 2           future customers.  

 3                  We're working closely with our 

 4           Office of Information Technology Services 

 5           partners to fully leverage this opportunity 

 6           and ensure its success.  As we enter the 

 7           second year of our five-year implementation 

 8           plan, I'm pleased to report that we are 

 9           on-track and on-budget.  

10                  We are also pursuing parallel projects 

11           that leverage technology to improve the 

12           taxpayer experience.  Although we are a 

13           technology-driven agency, many of our 

14           day-to-day operations are surprisingly 

15           old-school.  For example, each year we ask 

16           hundreds of thousands of taxpayers to mail us 

17           documents confirming their eligibility for 

18           various tax benefits, which is why I'm 

19           excited that we are currently testing a new 

20           tool that will allow taxpayers to upload 

21           documents to us using their phones.  

22                  This year we also expect to begin to 

23           pilot a project to deliver STAR credits by 

24           direct deposit, which will shave several days 


 1           off the time it takes to deliver this crucial 

 2           property tax relief to homeowners -- and it 

 3           will also avoid costly check production and 

 4           mailing costs.  It's just a great efficiency 

 5           if we can make it work.  

 6                  And we will continue to keep the 

 7           taxpayer experience front of mind as we 

 8           explore other opportunities to bring our 

 9           operations further into the digital age.  

10                  To conclude, I'm incredibly proud of 

11           the work that we're doing at the department, 

12           and I'm excited about Governor Hochul's 

13           Executive Budget, which will make a real 

14           difference in the lives of New Yorkers.  I 

15           look forward to working with all of you to 

16           move these initiatives forward, and I'm happy 

17           to take any questions. 

18                  CHAIRWOMAN WEINSTEIN:  Thank you.  

19                  We'll go first to Assemblymember 

20           Williams, chair of our Real Property Tax 

21           Committee.

22                  ASSEMBLYWOMAN WILLIAMS:  Thank you so 

23           much.  I have a few questions.

24                  First, we will start -- does the 


 1           department know the approximate percentage of 

 2           eligible homeowners that have not received 

 3           their rebate credit check?  

 4                  ACTING COMMISSIONER HILLER:  Have not 

 5           received the homeowner tax rebate check?

 6                  ASSEMBLYWOMAN WILLIAMS:  Yes.

 7                  ACTING COMMISSIONER HILLER:  I don't 

 8           know that number offhand, but I know it's a 

 9           very small number.  And I can explain how 

10           that works.  

11                  We've delivered about 2.4 million 

12           checks to homeowners.  There is a provision 

13           in these laws that relates to the federal 

14           taxability of the benefits, and it requires 

15           us to ensure that the check that we send does 

16           not exceed the tax liability of the property 

17           owner.  So there are -- we have confidence in 

18           most of the checks and can mail them well in 

19           advance of tax bills and that final part of 

20           the tax cycle.  But sometimes we have to wait 

21           until we actually get the final tax bills 

22           from a local government.  And so we've 

23           cleared that for most of the year, but in 

24           Long Island, in Nassau and then in Suffolk, 


 1           their tax schedule is later in the calendar 

 2           year.  So we're still clearing some of those 

 3           ones that are right on the edge.  

 4                  But I think it's in -- a hand -- it's 

 5           a couple of thousand out of the 2.4 million 

 6           we've sent.

 7                  ASSEMBLYWOMAN WILLIAMS:  Okay.  Also, 

 8           how are the ADUs assessed for real property 

 9           taxation purposes at the local level?  For 

10           example, are they assessed like other 

11           residential properties?  

12                  ACTING COMMISSIONER HILLER:  How 

13           are -- the accessory dwelling units, ADUs?

14                  ASSEMBLYWOMAN WILLIAMS:  Yes.

15                  ACTING COMMISSIONER HILLER:  okay.  

16           They're assessed just like any other 

17           property.  They're assessed based on the 

18           value of that property in the marketplace.  

19           So a property that has one dwelling unit on 

20           the property is going to be assessed based on 

21           its value, presumably its value in the 

22           marketplace if you put up a for-sale sign up 

23           today.  

24                  And then if there is another dwelling 


 1           unit on that property, that dwelling unit is 

 2           going to be assessed as part of the package 

 3           of that property.  You're buying that house, 

 4           you get an extra unit when you buy that 

 5           property.

 6                  ASSEMBLYWOMAN WILLIAMS:  Okay.  Also, 

 7           allowing the sales tax exemption for vending 

 8           machines to expire will put hundreds of 

 9           vendors out of business.  Has Tax and Finance 

10           done an analysis of the impact to sales tax 

11           revenue for the state if those small 

12           businesses cease to exist?  And more so, the 

13           same challenges that exist for visually 

14           impaired vendors, which affect vendors across 

15           the board.  So why wouldn't you extend the 

16           exemption for the whole industry?

17                  ACTING COMMISSIONER HILLER:  So first, 

18           I don't think that the Tax Department has 

19           done that specific analysis.

20                  I know that historically part of the 

21           reason there was an exemption for vending 

22           machines is because it was very difficult to 

23           program the machine to have an odd amount.  

24           You wanted that candy bar for a dollar, and 


 1           adding another seven cents onto it made it 

 2           difficult to handle with the cash in vending 

 3           machines.  

 4                  I believe that the conversation has 

 5           evolved over the years as many more vending 

 6           machines move to be cashless, because there's 

 7           a different opportunity to set the price of 

 8           the product.  And that -- I think that that's 

 9           part of the ongoing dialogue around the 

10           vending machine exemption.

11                  I think Governor Hochul is cognizant 

12           that the blind and visually handicapped, who 

13           are part of OCFS's business program and often 

14           are operating the little convenience shops in 

15           state office buildings, for example, they are 

16           offering -- as the foot traffic in those 

17           buildings has gone down, the vending business 

18           is increasingly important.  And that's why 

19           this would extend the vending exemption for 

20           that population.

21                  ASSEMBLYWOMAN WILLIAMS:  Okay.  And 

22           lastly, does the department have an idea on 

23           the number of new seniors who would qualify 

24           for the senior citizen's exemption if the 


 1           definition was to be amended?

 2                  ACTING COMMISSIONER HILLER:  We think 

 3           that slightly more senior citizens would 

 4           likely qualify for the exemption.  But more 

 5           importantly, we think that more senior 

 6           citizens who already qualify for the 

 7           exemption would be able to successfully apply 

 8           for the exemption and get that real property 

 9           tax benefit.

10                  The current definition of income in 

11           the senior citizen exemption is incredibly 

12           complicated, and it does not correspond to 

13           lines on your tax return.  So senior citizens 

14           have to bring extensive documentation to 

15           their assessor's office in order to qualify 

16           for that exemption.  And assessors have been 

17           telling us for years that they're concerned 

18           that senior citizens aren't claiming the 

19           exemption because that lift is really 

20           difficult and they have to do it each year.

21                  So the proposal to simplify the income 

22           definition for the senior citizen exemption 

23           is really to align it with lines on the tax 

24           return while retaining the core principles 


 1           that were part of the original definition of 

 2           income, so that we can help make sure that 

 3           it's easy for senior citizens to claim.

 4                  ASSEMBLYWOMAN WILLIAMS:  Okay.  Thank 

 5           you, Commissioner.

 6                  CHAIRWOMAN WEINSTEIN:  Senate?  

 7                  CHAIRWOMAN KRUEGER:  Thank you.  

 8                  We're starting out with 

 9           Senator Gounardes for 10 minutes as chair.

10                  SENATOR GOUNARDES:  Good afternoon, 

11           Commissioner.  Before I start my questions, I 

12           just want to -- in my previous role I was the 

13           chairman of the Civil Service Committee and I 

14           had the chance to visit the Department of 

15           Taxation and Finance.  We had a whole tour, 

16           got to meet lots of the employees there.  And 

17           just want to echo your compliments for the 

18           hard work they do.  It was incredible, the 

19           scale and the size and the efficiency of that 

20           operation, and it's a testament to those 

21           workers.  So thank you for acknowledging 

22           that.

23                  ACTING COMMISSIONER HILLER:  Thank 

24           you.


 1                  SENATOR GOUNARDES:  I want to -- I 

 2           have a bunch of questions here.

 3                  Can you -- a couple of years ago we 

 4           made changes to the personal income tax rate 

 5           and the corporate tax rate.  Can you speak to 

 6           the impact of those changes on the budget 

 7           since those times?

 8                  ACTING COMMISSIONER HILLER:  You know, 

 9           I don't know offhand what we thought the top 

10           corporate tax rate would bring in in revenue.  

11           I know that Governor Hochul has proposed to 

12           extend it and that we anticipate that it 

13           would bring in about $800 million this year 

14           and 1.2 billion next year and 880 the year 

15           after.  So I would guess that it was probably 

16           somewhere around that.  

17                  Our tax data is -- we have more recent 

18           tax data for personal income tax than for 

19           corporate tax for a variety of reasons 

20           related to when corporations file their 

21           taxes.  So we have preliminary income tax 

22           data through 2021, but we're still working 

23           with 2020 and 2019 data for corporate taxes.

24                  On the income tax side --


 1                  SENATOR GOUNARDES:   And why is that?

 2                  ACTING COMMISSIONER HILLER:  I think 

 3           there are a couple of reasons.  First, we 

 4           always each year prioritize finalizing the 

 5           filing -- what we call the study file for 

 6           personal income tax.  We prioritize that in 

 7           order to do forecasting for the year.  

 8                  And so we just closed tax year '21.  

 9           Those were the returns that were filed in '22 

10           for tax year '21.  We just closed that 

11           processing.  And we have a preliminary file 

12           of that data, and that will evolve over the 

13           year as taxpayers that are under audit, when 

14           those audits complete, then they'll move into 

15           the study file and then we'll get a final 

16           study file later this year.  

17                  But a corporation might have a tax 

18           filing year that starts in December, so in 

19           December of 2021.  Their year ends in 

20           December of 2022.  They'll be required to 

21           file that return for 2021 sometime in 2023.  

22           There are multiple extensions that are 

23           available.  And before you know it, we're in 

24           2024.


 1                  SENATOR GOUNARDES:  Gotcha.

 2                  ACTING COMMISSIONER HILLER:  So 

 3           there's just a little bit of difference of 

 4           scale.  

 5                  But certainly we're anticipating on 

 6           the corporate side about 800 million in the 

 7           first year of the extension.  And so I would 

 8           say we're probably around there in terms of 

 9           what we brought in under that rate in the 

10           first years.

11                  SENATOR GOUNARDES:  Sure.  Thank you.  

12           I just want to move on.  

13                  And can you speak to, you know, the 

14           Governor's proposal to extend the corporate 

15           tax rate?  We're not touching PIT, I 

16           understand that.  The corporate tax rate 

17           proposal, to just extend it for an additional 

18           three years.  Why three years?  Can you speak 

19           to how that number was derived?  Why not 

20           longer, why not shorter?  What was the 

21           thinking behind that?  Especially when we're 

22           projecting shortfalls starting next year in 

23           the outyears moving forward as we're looking 

24           at the entire fiscal financial plan.  


 1                  ACTING COMMISSIONER HILLER:  You know, 

 2           I can't speak to the specific reason to 

 3           choose three years.  I mean, I can speak 

 4           generally that the notion of having sunsets 

 5           on legislation, including perhaps tax rates, 

 6           is to ensure that we have the opportunity to 

 7           revisit them.  

 8                  There's nothing about extending it for 

 9           three years that would prevent the Governor 

10           and the Legislature from extending it again 

11           for an additional three years or making it 

12           permanent at that time.

13                  I also -- you know, I'm certainly 

14           conscious that although we had a strong stock 

15           market in 2021 and 2022, the forecasts 

16           suggest that we won't see those same trends 

17           in 2023 and 2024.  So it might be that we are 

18           going to be revisiting a number of our tax 

19           choices as we -- in the years ahead.

20                  SENATOR GOUNARDES:   Sure.  And I 

21           think -- you know, we recognize that there 

22           might be some uncertainty ahead.  The data is 

23           really mixed.  You know, there's -- on one 

24           hand it says we're going down and then we 


 1           have the hottest, you know, labor market, you 

 2           know, in 70 years.  Right?  So there's a lot 

 3           of conflicting data out there.

 4                  I'm concerned, though, when we maybe 

 5           are a little short-sighted in identifying 

 6           these things, because this -- we're obviously 

 7           projecting shortfalls in the outyears based 

 8           on what we're proposing now.  And that 

 9           determines the frame by which this whole 

10           budget is being presented.  

11                  And if you're presenting it with a 

12           doom-and-gloom perspective, well, that limits 

13           the choices or perceives to limit the choices 

14           that we might have to make or can make.  And 

15           so I'm concerned about we are self-selecting 

16           to narrow our scope and our view here.

17                  You mentioned some of the incentives 

18           and some of the credits and investments 

19           through tax policy the Governor is proposing.  

20           Can you tell me what in this budget and 

21           through tax policy the Governor is proposing 

22           to address childhood poverty?  

23                  ACTING COMMISSIONER HILLER:  I think 

24           maintaining our current income tax structure 


 1           and not increasing taxes on New York families 

 2           is certainly going to be helping New York 

 3           families, and that's a central part of 

 4           Governor Hochul's proposal.  

 5                  But I'm also aware that there 

 6           currently is a Child Poverty Reduction 

 7           Task Force that is deliberating about how 

 8           best to address child poverty going forward.  

 9           And that's a collaborative effort involving 

10           representatives of different state agencies 

11           and representatives of organizations that 

12           serve families in poverty.  

13                  And, you know, they haven't made 

14           specific recommendations yet out of that task 

15           force, and I would anticipate that when that 

16           happens, that there will be an effort to 

17           ensure that we're moving forward to implement 

18           those proposals.

19                  SENATOR GOUNARDES:  You know, under 

20           existing state law we have to halve the rate 

21           of childhood poverty by 2030.  We're already 

22           in 2023.  And any expert who studies tax 

23           policy and children will tell you that you're 

24           not going to get anywhere near that reduction 


 1           without significantly increasing the size of 

 2           the child tax credit, providing families 

 3           assistance.

 4                  Is there anything in this Governor's 

 5           proposal that does -- makes any adjustments 

 6           or increases to the state's child tax credit?

 7                  ACTING COMMISSIONER HILLER:  No.  The 

 8           current -- Governor Hochul's Executive Budget 

 9           maintains New York's generous Earned Income 

10           Tax Credit, Empire State Child Credit, Child 

11           and Dependent Care Credit programs.  We 

12           provide those refundable credits to millions 

13           of families.  And those are critical income 

14           supports.  They represent a policy choice to 

15           deliver those income supports through the tax 

16           code.  But certainly the tax code isn't the 

17           only way that the state is providing income 

18           supports to low-income families.

19                  SENATOR GOUNARDES:  Sure.  Thank you.  

20           I think we can, you know, disagree a little 

21           bit there in that we still have -- New York 

22           is still ranked one of the highest states in 

23           terms of the levels of childhood poverty.  

24           We're at 19 percent.  The Comptroller put out 


 1           a report on this in December.  Stubbornly 

 2           high rate of childhood poverty.  

 3                  And even the Child Poverty Task Force 

 4           is going to come out with a recommendation to 

 5           increase the child tax credit.  So I think 

 6           it's a missed opportunity for us here in this 

 7           budget.  We have to get to 50 percent in 

 8           seven years.  This is Year 1 of that seven.  

 9           If we don't do anything, we are going to be 

10           way behind in doing that.

11                  The existing state child tax credit is 

12           linked to the pre-2017 federal child tax 

13           credit, is that correct?  

14                  ACTING COMMISSIONER HILLER:  Yes.

15                  SENATOR GOUNARDES:   Can you speak to 

16           why that is, or how that --

17                  ACTING COMMISSIONER HILLER:  We -- 

18           right at the end of 2017 the Trump 

19           administration advanced significant 

20           comprehensive tax changes, the Tax Cuts and 

21           Jobs Act.  And New York had to respond to 

22           those changes essentially immediately as part 

23           of that budget cycle.  And, you know, for the 

24           most part the policy decision that was made 


 1           at the time by the Governor and the 

 2           Legislature was to maintain the status quo 

 3           for New York as compared to federal law 

 4           before the Trump tax cuts took effect, and 

 5           then go essentially one at a time to re -- 

 6           what we call recouple to the federal law, 

 7           where we thought that the policy change that 

 8           was made as part of the Trump tax cuts made 

 9           sense for New York.  

10                  And so there was essentially a blanket 

11           decoupling from the changes that were being 

12           made by the Tax Cuts and Jobs Act in order to 

13           make sure that the -- that many of the 

14           changes that were being driven by that 

15           federal tax legislation didn't disturb the 

16           policy choices that New York had already 

17           made.

18                  SENATOR GOUNARDES:  You will find no 

19           disagreement from me in questioning the 

20           wisdom of some of the Trump tax cuts.

21                  However, the 2017 law also increased 

22           the maximum amount of the credit from $1,000 

23           to $2,000 per child, yet lowered the 

24           refundability threshold from 3,000 to 2500 


 1           and essentially doubled the phaseout 

 2           thresholds.  Which the totality of all those 

 3           choices in the 2017 law was a more generous 

 4           federal tax credit, but the state is not 

 5           matching or meeting that moment.  And the 

 6           state tax credit right now is capped out at 

 7           $500 per child.  

 8                  So I'm concerned that we have not 

 9           taken advantage of our own tool in our 

10           toolkit through state tax policy to match the 

11           more generous -- or come near or nearer the 

12           generosity of the federal government, 

13           especially when we know that New York ranks 

14           so persistently high on the scale of children 

15           who live in poverty.

16                  Do we have an estimate or can you 

17           ballpark or has any analysis been done what 

18           it would cost to -- if we bring the state tax 

19           code up and we kind of recouple back to the 

20           federal child tax credit standards, what that 

21           would cost us?  

22                  ACTING COMMISSIONER HILLER:  You know, 

23           I don't know that offhand.  I can certainly 

24           go back and ask my staff to look at that 


 1           question and get back to you.

 2                  SENATOR GOUNARDES:  Okay, great.  I'll 

 3           have some more questions on the second round.  

 4           Thank you.

 5                  ACTING COMMISSIONER HILLER:  Sure.  Of 

 6           course.

 7                  CHAIRWOMAN KRUEGER:  Thank you.

 8                  Assembly.  

 9                  CHAIRWOMAN WEINSTEIN:  We go to 

10           Assemblyman Zebrowski, three minutes.

11                  ASSEMBLYMAN ZEBROWSKI:  Thank you.  

12                  Commissioner, appreciate it.  I chair 

13           the Corporations, Authorities and 

14           Commissions, so with only three minutes I'm 

15           going to have to talk about the MTA Payroll 

16           Mobility Tax.  

17                  I don't know if you're going to have 

18           all the answers to this, but I would 

19           appreciate if your department could supply 

20           myself and the committee with some additional 

21           information that we probably won't get to in 

22           the three minutes of a discussion today.

23                  We're interested in sort of the 

24           overall rationale of choosing the payroll tax 


 1           as the way of raising the money for the MTA.  

 2                  We're interested in how granular sort 

 3           of the data you have is on who these 

 4           businesses are, where they are.  We're 

 5           interested in -- so I've heard the estimate 

 6           of 5 percent, this is only going to deal with 

 7           5 percent of businesses.  My understanding is 

 8           this increase will apply to those that have 

 9           an annual payroll of over 1.736 million, 

10           right?  The number is given in the quarterly 

11           number; for some reason my brain does it in 

12           an annual number.

13                  ACTING COMMISSIONER HILLER:  Somewhere 

14           around there.

15                  ASSEMBLYMAN ZEBROWSKI:  It doesn't 

16           seem very high to me.  So I guess we would 

17           consider small businesses to be under that.  

18           I would think it would be a medium-sized 

19           business to have about a $2 million annual 

20           payroll.  So just interested in sort of, you 

21           know, being given that data.

22                  Be interested in if there were other 

23           alternatives you considered to fill this gap 

24           for the MTA, why or why not you -- why you 


 1           chose this one and why you didn't choose 

 2           those.  

 3                  Interested as to, with that data of 

 4           the businesses, right, these level of 

 5           New York businesses, in this category of 

 6           5 percent, assuming that's correct, what's 

 7           the mean, what's the median?  We have some 

 8           very large businesses, some medium-sized 

 9           business in the MTA district.  

10                  And lastly, whether philosophically 

11           you consider all the businesses in the MTA 

12           district to be similarly situated.  You 

13           obviously have, I think, 12 counties that 

14           make up the MTA district, various levels of 

15           service, some that have customers and 

16           employees that utilize MTA services, and some 

17           like West of Hudson businesses that have no 

18           customers or employees that are able to 

19           utilize MTA services.  

20                  So those are the type of questions the 

21           committee has.  There's no way you could 

22           answer that in three minutes.  So instead, I 

23           decided to list them, and maybe you could get 

24           back to the committee on them.  


 1                  Thank you.

 2                  ACTING COMMISSIONER HILLER:  Sure.  I 

 3           don't think I have time to answer any of the 

 4           questions.  

 5                  (Laughter.)

 6                  ASSEMBLYMAN ZEBROWSKI:  No, I don't 

 7           think you do either.

 8                  CHAIRWOMAN KRUEGER:  Sorry.  She 

 9           didn't have time to answer.  

10                  CHAIRWOMAN WEINSTEIN:  That's okay.  

11           We'll -- not now, but I'll follow up with 

12           that when it's my turn.

13                  ACTING COMMISSIONER HILLER:  Okay.  I 

14           mean, I can answer some of those questions, 

15           but we'll come back to it?  Okay.  

16                  CHAIRWOMAN WEINSTEIN:  Yeah, we'll 

17           come back to that, then. 

18                  ACTING COMMISSIONER HILLER:  That's 

19           great.

20                  CHAIRWOMAN WEINSTEIN:  Senate?  

21                  CHAIRWOMAN KRUEGER:  Senator Murray.

22                  SENATOR MURRAY:  Thank you very much.  

23                  I think we could have a whole hearing 

24           on the MTA payroll tax, to be honest.  


 1                  But first let me start, Commissioner 

 2           Hiller, with a statement.  In looking at 

 3           this, I'm looking at us prohibiting the sale 

 4           of all flavored tobacco products, and I'm 

 5           looking at what that's going to cost us:  

 6           116 million in fiscal year '24, 222 million 

 7           estimated in fiscal year '25.  The Nanny 

 8           State rears its head again.  And we're so 

 9           concerned about health or something, and yet 

10           we're fine with sugar-coated candied THC 

11           edibles in all sorts of flavors.  We're fine 

12           with all sorts of flavored alcohol.  We now 

13           have alcohol seltzers that we're selling and 

14           generating revenue.

15                  The reason I bring this up is we're 

16           perfectly willing to watch over $100 million 

17           go out the door in tax revenue, yet I look at 

18           the creation of the tax credit for childcare 

19           creation and expansion.  The amount allocated 

20           this year is zero.  I understand we're 

21           creating it, it's new.  But we're giving away 

22           116 million, an estimated 116 million in 

23           revenue.  Why couldn't we have kicked that in 

24           quicker?  


 1                  I also see when it does kick in, 

 2           there's a cap, in fiscal year '25 and fiscal 

 3           year '26, of 25 million.  For childcare 

 4           credits.  I mean, we should -- that should be 

 5           tripled, quadrupled.  And we can't say it's 

 6           because of revenue when we're watching a 

 7           couple of hundred million go out the door by 

 8           banning flavored tobacco.  

 9                  Can you speak to that?

10                  ACTING COMMISSIONER HILLER:  You know, 

11           I want to be careful about talking about 

12           health policy, because that's definitively 

13           not my -- not my bailiwick.  

14                  But I do believe that the proposal to 

15           ban flavored tobacco is part of a broader 

16           effort to curb youth smoking, the costs of 

17           which are incalculable over the lifetimes of 

18           those children who begin smoking.

19                  So I think that that's first something 

20           that has to be balanced over time, and I 

21           believe that my health policy colleagues have 

22           been thoughtful about that.

23                  In terms of the tax revenue impact of 

24           that ban, New York has some of the highest 


 1           tobacco taxes in the country.  And that's 

 2           also part of a calculated effort to try to 

 3           curb youth smoking by making the -- making 

 4           cigarettes that much further out of reach for 

 5           young people.

 6                  SENATOR MURRAY:  I'm sorry, I have 

 7           to -- you know, only because I have one more 

 8           question.

 9                  ACTING COMMISSIONER HILLER:  Of 

10           course.

11                  SENATOR MURRAY:  And by the way, we 

12           upped the tax last time and lost revenue 

13           because -- but not because people quit.  They 

14           went other places.  But really quickly --

15                  ACTING COMMISSIONER HILLER:  But 

16           children don't.  That's part of the 

17           challenge.

18                  SENATOR MURRAY:  Real quickly, and to 

19           localize, Suffolk County had a ransomware 

20           attack on its website.  I want to know, is 

21           there going to be any kind of an impact 

22           because of that in regards to rebates or STAR 

23           rebates or anything like this.  Will there be 

24           any impact, or are we okay?  


 1                  ACTING COMMISSIONER HILLER:  We don't 

 2           anticipate any impacts.  

 3                  Staff at the department have worked 

 4           with staff in Suffolk County about -- there 

 5           are a number of places where we interact with 

 6           county government.  That includes property 

 7           tax issues.  It also relates to like real 

 8           estate transfer tax issues and recording tax 

 9           issues.  

10                  And we've been working with them to 

11           sort of smooth through the impacts of the 

12           ransomware attack.

13                  SENATOR MURRAY:  Okay, thank you so 

14           much.

15                  CHAIRWOMAN KRUEGER:  Thank you.

16                  Assembly.  

17                  CHAIRWOMAN WEINSTEIN:  Yes, we go to 

18           Assemblyman Dilan.

19                  ASSEMBLYMAN DILAN:  Thank you, 

20           Madam Chair.  And thank you, Commissioner.  

21           I'll get right to my questions.  

22                  In the budget proposal -- we covered 

23           some of this at the first hearing on Monday 

24           as it relates to the MTA and its potential 


 1           local share of revenue from the three 

 2           downstate casinos.  Can you give me more 

 3           background on how that revenue is going to be 

 4           split?  Are they going to get a hundred 

 5           percent of the revenue or are they going to 

 6           split with the state and the General Fund in 

 7           some form?  Could you give me more detail?  

 8                  ACTING COMMISSIONER HILLER:  I wish I 

 9           could answer that question, but it is 

10           definitely not in my lane.  I'm not part of 

11           that part of the budget where we're talking 

12           about a new casino and how that revenue is 

13           going to split out, because the 

14           Tax Department doesn't have any role in that 

15           process.

16                  I can certainly bring it back to my 

17           colleagues and ask them to --

18                  ASSEMBLYMAN DILAN:  Maybe that was 

19           probably more appropriate for Monday.  But 

20           the question list --

21                  ACTING COMMISSIONER HILLER:  Sure, of 

22           course.  I wish I knew, but I just don't.

23                  ASSEMBLYMAN DILAN:  The question list 

24           for Monday was extensive, so I figured it 


 1           might be faster here.

 2                  ACTING COMMISSIONER HILLER:  It's 

 3           worth a shot.

 4                  ASSEMBLYMAN DILAN:  Also have a 

 5           question on some of the changes you're making 

 6           to the collection of local sales tax in terms 

 7           of making the laws permanent.  What's the 

 8           rationale for doing that?  

 9                  And how is New York City included in 

10           that?  According to my documents, it's 57 

11           counties outside of New York City.  How is 

12           New York City treated with respect to that in 

13           either the existing law or some other -- 

14           something else that's not here?

15                  ACTING COMMISSIONER HILLER:  So first, 

16           with regard to New York City, New York has 

17           permanent authority to -- sorry.  With regard 

18           to New York City, New York City has permanent 

19           authority to collect its sales tax.  It 

20           doesn't come up for renewal every two years 

21           or every three years like the sales taxes in 

22           other counties do.  

23                  The Executive has long proposed to 

24           make the state authorization for local sales 


 1           taxes permanent at their current rates.  That 

 2           certainly would never preclude the 

 3           Legislature from considering and enacting 

 4           changes to the existing rates.  

 5                  But the -- sales tax has increasingly 

 6           become a central revenue stream for counties, 

 7           and so there's uncertainty about that.

 8                  ASSEMBLYMAN DILAN:  I get the answer.  

 9           I want to try to squeeze in -- because, you 

10           know, it would be great for us because it 

11           saves us a lot of time at the end of session.

12                  But would New York City then, under 

13           this proposal, get the right to be autonomous 

14           in the 1 percent increase that the other 

15           counties would have local authority to do?

16                  ACTING COMMISSIONER HILLER:  So right 

17           now New York City already has the authority, 

18           without coming back to the state, to do it.  

19           And that would be continued under this 

20           proposal.  

21                  ASSEMBLYMAN DILAN:  I get that part.  

22           But the new law is going to allow the 57 

23           other counties the autonomy to increase by 1 

24           percent above the state rate.  Will New York 


 1           City get that same right?  

 2                  ACTING COMMISSIONER HILLER:  So New 

 3           York City's already above that rate.  So the 

 4           state-based rate is 3 percent.  Most counties 

 5           in the state are already at 4 percent or over 

 6           4 percent, and New York City already is as 

 7           well.

 8                  ASSEMBLYMAN DILAN:  Got it.  Thank 

 9           you.

10                  CHAIRWOMAN WEINSTEIN:  Senate.

11                  CHAIRWOMAN KRUEGER:  Thank you.  

12                  Senator Tom O'Mara.

13                  SENATOR O'MARA:  Thank you.

14                  Good afternoon.

15                  ACTING COMMISSIONER HILLER:  Good 

16           afternoon, Senator.

17                  SENATOR O'MARA:  Last year we 

18           accelerated the middle-class tax cut, 

19           income tax cut.  With inflation last year, 

20           this year, you know, bracket creep is 

21           becoming a significant issue in that.  

22                  Are you supportive of indexing our 

23           income tax brackets for inflation to limit 

24           the impact of this bracket creep?


 1                  ACTING COMMISSIONER HILLER:  You know, 

 2           one of the great things about being the Tax 

 3           Commissioner is that we administer the policy 

 4           choices of the Governor and the Legislature.  

 5                  And, you know, I certainly understand 

 6           an argument for indexing for inflation.  I 

 7           can also say that, you know, New York's tax 

 8           brackets are very, very concentrated in the 

 9           low income.  In the low income there are 

10           several very, very, very low-income brackets.  

11           And then we start having very, very, very 

12           wide brackets.  So, you know, one could also 

13           contemplate adding additional brackets to add 

14           additional progressivity into the tax, for 

15           example.  

16                  I think there are lots of ways that we 

17           could consider changing the current income 

18           tax rate structure to address that kind of 

19           creep.  And it might include indexing, but it 

20           might include other ways of adjusting the 

21           brackets.

22                  SENATOR O'MARA:  Thank you.  

23                  I would I guess request that you have 

24           some discussions along that line --


 1                  ACTING COMMISSIONER HILLER:  Sure.  Of 

 2           course.

 3                  SENATOR O'MARA:  -- with the 

 4           administration and try to get something 

 5           moving on that.

 6                  One issue that's been a nuisance 

 7           lately is these marijuana sticker shops 

 8           across the state, cash businesses gifting 

 9           marijuana.  What is the department doing with 

10           regards to assuring they're paying taxes on 

11           this, both income and sales taxes?  

12                  You know, we've had law enforcement 

13           raid these entities that are operating in a 

14           gray market.  Law enforcement, district 

15           attorneys are kind of in a quandary of how to 

16           deal with these.  I know one DA at least is 

17           looking at enforcement of tax -- of not 

18           paying taxes.  

19                  But, you know, we've got one in Elmira 

20           that gave away three cars as incentives for 

21           people to shop in their business.  Three 

22           brand-new automobiles.  Another one went up 

23           to the rooftop of their store and threw 

24           $10,000 in cash out to their customers in the 


 1           parking lot.

 2                  What is the state doing -- first of 

 3           all, they're not doing anything to shut these 

 4           things down other than sending a 

 5           cease-and-desist letter, which is useless.  

 6           But what are we doing to at least collect tax 

 7           revenues on these businesses that are 

 8           operating this way?

 9                  ACTING COMMISSIONER HILLER:  So, one, 

10           you know, I certainly understand your 

11           frustration around cannabis tax enforcement.

12                  One of the things that -- I think 

13           there are a lot of assumptions about what the 

14           Tax Department can do around the enforcement 

15           of cannabis taxes.  But the original 

16           legislation that was enacted didn't really 

17           give the Tax Department the kind of authority 

18           we would need to undertake cannabis 

19           enforcement the same way we undertake tobacco 

20           tax enforcement, for example.  

21                  And that discussion began -- I think 

22           towards the end of last session there was 

23           legislation kicking around that would expand 

24           our authority and make clearer when the 


 1           Tax Department can walk into a store and 

 2           begin to search it and try to find illicit 

 3           cannabis and the like.  

 4                  And I would anticipate that those 

 5           discussions are going to continue in this 

 6           session, because at the end of the day the 

 7           Tax Department has robust -- deep experience 

 8           in enforcing tobacco taxes, and we understand 

 9           that the consensus seems to be that the 

10           Tax Department will be playing a significant 

11           role in the future.  But --

12                  SENATOR O'MARA:  Well, you could go 

13           into a convenience store and -- with 

14           enforcement actions on their failure to pay 

15           sales taxes.  All sorts of things.

16                  So regardless of them giving marijuana 

17           out, they're selling stickers for whatever 

18           price.  And they're not paying taxes on that.  

19           Shouldn't there at least be enforcement 

20           actions taking place to make sure that 

21           they're at least paying taxes on the sales of 

22           these stickers?

23                  ACTING COMMISSIONER HILLER:  So first, 

24           you know, I can't speak to any specific audit 


 1           or enforcement activity around that.  But I 

 2           would say we would definitely have an 

 3           expectation that a convenience store that is 

 4           selling stickers, whether for a dollar or for 

 5           $10 or for $100, is collecting sales tax from 

 6           its customers on that sale.  

 7                  And that -- that's definitely -- but 

 8           there's a -- that doesn't happen.  We don't 

 9           get that information immediately.  Those 

10           convenience stores are going to file their 

11           tax returns quarterly, it's going to be 

12           lumped into their larger return.  And so we 

13           can go out and take enforcement action about 

14           individual ones, but there's a civil 

15           structure for that enforcement action where 

16           we send them a notice and we tell them that 

17           they owe more taxes.  And then, you know, it 

18           goes through a process that sometimes takes 

19           many years on the civil side.  

20                  We don't have tax crimes around 

21           cannabis yet.  We have had tobacco 

22           enforcement actions where we have happened to 

23           find cannabis in the course of tobacco 

24           inspections, and that has led to cannabis 


 1           arrests.  And we're working closely with our 

 2           law enforcement partners to make sure that 

 3           that happens when we -- when we find cannabis 

 4           in the course of our enforcement activities 

 5           for other taxes.

 6                  CHAIRWOMAN KRUEGER:  Thank you.  

 7                  SENATOR O'MARA:  We should be tracking 

 8           this cash, whether it's cannabis or not.  

 9           There's boatloads of it when they raid these 

10           places.  They're doing over $100,000 a week.

11                  CHAIRWOMAN KRUEGER:  Thank you, Tom 

12           O'Mara.

13                  Assembly.  

14                  CHAIRWOMAN WEINSTEIN:  Assemblywoman 

15           Shimsky.

16                  ASSEMBLYWOMAN SHIMSKY:  Thank you very 

17           much, Madam Chair.  

18                  And thank you for joining us, 

19           Commissioner.  I salute you for doing more 

20           digitization.  I think moving into the 

21           21st century is a good idea.

22                  Were there any reductions in any of 

23           our budget lines taken from the cost savings 

24           we might anticipate from not having to do 


 1           mail and things like that?

 2                  ACTING COMMISSIONER HILLER:  Not yet.

 3                  ASSEMBLYWOMAN SHIMSKY:  Not yet.  

 4                  ACTING COMMISSIONER HILLER:  You know, 

 5           I'm -- you know, we're actually focused on 

 6           helping -- we're trying to -- we are really 

 7           good at holding taxpayers accountable for 

 8           having failed to demonstrate their 

 9           eligibility for benefits, and we're trying to 

10           do a better job of helping to make sure that 

11           those taxpayers are able to claim the 

12           benefits that they're entitled to.  Because 

13           for better or for worse, the Governor and 

14           Legislature have chosen the Tax Department to 

15           deliver a broad range of low-income supports 

16           to working families.  

17                  And so we're trying to help make sure 

18           that we can do better with taxpayers and help 

19           them comply.  It's frustrating to me, as the 

20           general counsel of the Tax Department, that 

21           we can ask a taxpayer to provide a birth 

22           certificate for a child to demonstrate 

23           eligibility, and they don't.  We go through a 

24           remediation process and they don't produce 


 1           it.  We go to a hearing before an 

 2           administrative law judge, and suddenly 

 3           there's the birth certificate.  

 4                  And I have to assume that that's 

 5           because that family didn't feel comfortable 

 6           mailing us the birth certificate.  And so we 

 7           have to try to find other ways to make it 

 8           possible for taxpayers to answer the 

 9           questions that are reasonable questions about 

10           their eligibility for the benefit, but do so 

11           in a way that is easier for them to comply 

12           and that will ultimately lead us to spend 

13           more money on those credits.

14                  ASSEMBLYWOMAN SHIMSKY:  And presumably 

15           it will take a lot less money if they could 

16           just email you the birth certificate as 

17           opposed to calling a hearing.

18                  ACTING COMMISSIONER HILLER:  I would 

19           certainly hope so, in the long run.  But I 

20           think that that would be something that would 

21           play out over time.

22                  ASSEMBLYWOMAN SHIMSKY:  Okay.  Okay.  

23                  And how many more frontiers do we have 

24           to go in terms of digitization?  


 1                  ACTING COMMISSIONER HILLER:  I think 

 2           that -- you know, I'm really excited about 

 3           our IT modernization effort because our 

 4           platforms are on 40-year-old technology.  But 

 5           for example, we would like to be able to 

 6           issue notices in Spanish.  But our 

 7           notices are currently hard-coded, and that 

 8           means that every time we change a word, it 

 9           requires decoders to go in and change that 

10           word in every variation of that notice.  

11                  And so the possibility of making those 

12           kinds of jumps in our engagement and in our 

13           service to taxpayers, really sort of depends 

14           on us replatforming that technology so that 

15           we have a different kind of flexibility 

16           around how we work.

17                  ASSEMBLYWOMAN SHIMSKY:  Okay.  What 

18           percentage of our budget are our cash 

19           reserves at this point, and what is 

20           considered -- what is the range of 

21           acceptability?

22                  ACTING COMMISSIONER HILLER:  You know, 

23           I don't know that answer.  I know that we're 

24           hoping to be at $20 billion at the end of 


 1           this cycle.  But I think it's a $227 billion 

 2           budget.  Some of that is federal funds, so I 

 3           think I would probably separate them out 

 4           before I went down to the state.  

 5                  So we're -- we're -- I can't give you 

 6           that number.  But we're making significant 

 7           progress in making sure that we have a rainy 

 8           day fund that would help us if we saw a 

 9           significant economic downturn.

10                  ASSEMBLYWOMAN SHIMSKY:  Okay, great.  

11           Thank you.

12                  CHAIRWOMAN WEINSTEIN:  Thank you.

13                  To the Senate?  

14                  CHAIRWOMAN KRUEGER:  Thank you.  

15                  I think it's me at the moment.

16                  So I was very pleased to see in the 

17           Governor's budget a modernization of the 

18           definitions of SCRIE, Senior Citizen Renting 

19           Income Exemption, an incredibly important 

20           program in the City of New York and a few 

21           other counties for freezing elderly 

22           people's -- low incomes -- rent.  

23                  The landlord gets it through a 

24           property tax deduction, so landlords also 


 1           like it, so it's a win/win.  And this would, 

 2           at local option, give the locality the option 

 3           to no longer count Social Security income 

 4           towards income, which I think is huge for the 

 5           City of New York.  

 6                  Does this include SSD and SSI in 

 7           addition to Social Security retirement funds?  

 8           Is it your understanding it would?  

 9                  ACTING COMMISSIONER HILLER:  I don't 

10           believe that it does, but I don't believe 

11           that the current definition does either.

12                  CHAIRWOMAN KRUEGER:  You don't think 

13           it does.

14                  ACTING COMMISSIONER HILLER:  I will 

15           have to get back to you on that.  I'm sort of 

16           working from memory.  But I believe that we 

17           were pretty closely tracking what the 

18           original definition was, but trying to 

19           simplify it by matching it to clear elements 

20           on the tax return.  

21                  I'm happy to go look at that question.  

22           I mean, because we've heard people ask us 

23           about whether we should be moving to simplify 

24           the income definition for the disabled 


 1           exemptions --

 2                  CHAIRWOMAN KRUEGER:  That was my 

 3           second question, why not do the same thing?  

 4                  ACTING COMMISSIONER HILLER:  Yeah, 

 5           which has -- because it -- the definition 

 6           doesn't exactly match now.  And so I'm not 

 7           sure that we would necessarily want to see it 

 8           exactly match the senior citizen exemption 

 9           going forward.  

10                  But I'm certain that there are 

11           opportunities to simplify that as well, in 

12           ways that would make it easier for people who 

13           should be getting those exemptions to be able 

14           to demonstrate that they're eligible for 

15           them.

16                  CHAIRWOMAN KRUEGER:  So I would love 

17           your help to do that to -- and I think I can 

18           probably get New York City to support it as 

19           well, because we see this as both programs an 

20           incredibly effective tool to help keep the 

21           elderly and disabled in their homes.  

22           Because, guess what, we don't have anywhere 

23           else for them to go.  We want to keep them in 

24           their homes.  


 1                  So I appreciate your follow-up on 

 2           that.

 3                  Then there's a section that extends 

 4           the property tax exemption or reduced rates 

 5           for REITs, real estate investment trusts.  

 6           Why?  I mean, we actually have problems 

 7           nationally with REITs purchasing up the 

 8           housing stock, both single-family houses and 

 9           multifamily dwellings.  With all due respect, 

10           not necessarily knowing what they're doing in 

11           real estate, so they cause all kinds of 

12           problems for people.  And now why are we 

13           giving them a reduced tax rate?

14                  ACTING COMMISSIONER HILLER:  I believe 

15           that that reduced tax rate -- so normally you 

16           pay $2 per $500.  And the reduced tax rate 

17           for REITs is $1 per $500.  I believe that 

18           that's tied to some of the formation and 

19           initial acquisition of properties where the 

20           seller of the property is becoming an owner 

21           of the REIT.  And so it's part of -- it's 

22           part of -- you know, there's a structure 

23           there where the grantor is getting an 

24           ownership interest in the REIT that's at 


 1           least 50 percent of the value of the property 

 2           that comes in.  

 3                  It's a complicated formula.  It's been 

 4           in place since 1999.  I think that the 

 5           proposal to extend it is because it has 

 6           become part of the baseline for the financial 

 7           operations of those REITs, especially -- and 

 8           this isn't just that they're acquiring an 

 9           investment property.  There's an ownership 

10           transaction that's part of the transaction.

11                  CHAIRWOMAN KRUEGER:  So do you think 

12           there are private owners who are moving it 

13           into a REIT model so they can reduce their 

14           taxes?  Because you said it's sometimes 

15           transferring to themselves within a REIT.

16                  ACTING COMMISSIONER HILLER:  No, I 

17           think that the -- it's the grantor, the 

18           seller of the property, is becoming an owner 

19           of the REIT as part of it.  I -- I can't 

20           imagine that there's that much tax advantage 

21           to -- that would drive somebody to enter into 

22           the REIT when there are so many other tax 

23           avoidance opportunities available.

24                  CHAIRWOMAN KRUEGER:  Well, apparently 


 1           it cuts their rate in half, so there probably 

 2           is a significant saving to them.

 3                  ACTING COMMISSIONER HILLER:  Right, 

 4           but we're -- but we're -- you know, so I 

 5           think, depending on the scale of the 

 6           building, that could make a difference.  And 

 7           certainly this is a policy choice that the 

 8           Governor and -- that past governors and past 

 9           legislatures have been making for decades.  

10                  I think that Governor Hochul is 

11           proposing to maintain the status quo for the 

12           industry, and ...

13                  CHAIRWOMAN KRUEGER:  So will you be 

14           able to tell me how much money in REIT taxes 

15           we are collecting so that I can calculate how 

16           much we would be collecting if they paid the 

17           same rate as everybody else owning property?  

18                  ACTING COMMISSIONER HILLER:  You know, 

19           I'm not sure that I can.  I mean, we can 

20           certainly look at that question.  I'm not 

21           sure, though, that we'd be able to do that 

22           because I -- we'd have to go through real 

23           estate transfer tax filings in a different 

24           way than we normally do.  


 1                  But we can certainly look at that 

 2           question and get back to you with what we do 

 3           know and what we don't know.

 4                  CHAIRWOMAN KRUEGER:  I would 

 5           appreciate that.  Thank you.

 6                  So there's a proposal, and I think 

 7           it's been made in previous years and rejected 

 8           by the Legislature, to allow the Department 

 9           of Taxation and Finance the right to appeal a 

10           tax appeal tribunal decision.

11                  ACTING COMMISSIONER HILLER:  Yes.

12                  CHAIRWOMAN KRUEGER:  We have a tax 

13           appeal tribunal so that when taxpayers 

14           believe that the wrong decision has been made 

15           by the department, they can go to someone for 

16           appeal.

17                  That someone is a group of people that 

18           the Governor has actually appointed, I guess 

19           with confirmation by the Senate.  So these 

20           are government appointees who are supposedly 

21           independent but knowledgeable about Tax Law, 

22           saying, Sorry, the department was right, you 

23           can try to go to court, that's your right.  

24           Or no, you're right, the department made a 


 1           mistake.

 2                  So now you want the power as the 

 3           department to go to court if the tribunal 

 4           rules against you.  I just think that's a 

 5           dangerous policy road to go down.  Do you 

 6           lose a lot of these fights with the tribunal?  

 7                  ACTING COMMISSIONER HILLER:  No, 

 8           actually we win most cases that come before 

 9           the tribunal.  But that's because in most of 

10           the cases that come before the tribunal --

11                  CHAIRWOMAN KRUEGER:  Can you hold the 

12           microphone closer?

13                  ACTING COMMISSIONER HILLER:  Oh, I'm 

14           sorry.  Sure.

15                  We actually win most of the cases that 

16           come before the tribunal, but that's because 

17           in most of the -- you know, taxpayers can 

18           appeal as of right, but in most cases the tax 

19           treatment was actually pretty clear.  

20                  And although taxpayers have the right 

21           to protest that they should get that credit 

22           even though the Tax Department denied it, 

23           the -- often the -- there are really bright 

24           lines and the taxpayers advancing an appeal, 


 1           often pro se, and it's just part of the 

 2           business of the tribunal.

 3                  But at the same time, there are 

 4           certainly other issues that come before the 

 5           tribunal that are much more complex, that 

 6           involve different kinds of questions about 

 7           the Tax Law or about the Constitution, the 

 8           state Constitution or the federal 

 9           Constitution, about whether or not the state 

10           is appropriately exercising its taxing power 

11           under the Constitution.  

12                  And in those cases, people in good 

13           faith can have a different opinion about what 

14           the right answer can be.  So an 

15           administrative law judge may have ruled for 

16           the department, and the Tax Appeals Tribunal 

17           may have not ruled for the department.  In 

18           that case, the tax law judge ruled for the 

19           department and the tribunal did not.  

20                  And I think the question that we're 

21           facing as we go forward is whether -- if the 

22           question is, for example, whether the state 

23           is appropriately exercising its taxing power 

24           vis-a-vis other states, whether or not that 


 1           decision should be a decision that rests with 

 2           the Tax Appeals Tribunal or whether it should 

 3           properly be heard by state and federal courts 

 4           as a question of constitutional law for the 

 5           country.

 6                  CHAIRWOMAN KRUEGER:  I still think 

 7           it's a little bit of a slippery slope for us 

 8           to have an agency that challenges its own 

 9           tribunal on appeals.

10                  ACTING COMMISSIONER HILLER:  I think 

11           the -- you know, one thing I would say is 

12           that there are 32 states that have an 

13           equivalent independent administrative tax 

14           court.  In all but two of them, the tax 

15           agency has a right to appeal.  The model ABA 

16           legislation for a tax appeals tribunal has an 

17           agency right to appeal.  

18                  In the two states that don't have a 

19           right to appeal:  Delaware, the tax agency 

20           can remove a case to its trial courts, in the 

21           first instance; and in California, there are 

22           constitutional limits on the authority of a 

23           tax agency to render decisions on 

24           constitutional questions.


 1                  CHAIRWOMAN KRUEGER:  Thank you.  

 2                  Following up on my colleague Senator 

 3           O'Mara's concerns about the illegal cannabis 

 4           stores -- and I am share his frustration, 

 5           trust me.  And we have been working with the 

 6           Governor's office and your department on 

 7           getting a stronger law out there to give more 

 8           tools to your agency, OCM, police, sheriffs, 

 9           et cetera.  And hopefully that will happen 

10           soon.  

11                  But I also just want to point out that 

12           there are tools that not every county knows 

13           they could be using.  New York City just this 

14           week started sending out letters to landlords 

15           who rent to illegal cannabis stores, pointing 

16           out that they're violating the law and that 

17           we're going to force eviction of those 

18           facilities.  So that's one option.  

19                  There's also something called the 

20           Public Nuisance Law that's been on the books 

21           forever and actually was used very 

22           effectively to close down illegal liquor 

23           locations throughout our New York State 

24           history.  That's also on the books that could 


 1           be used.  And sheriffs have come up with some 

 2           very creative ideas -- I'm going to stop.  

 3                  But for Senator O'Mara and your 

 4           counties, I'd be happy to sort of suggest all 

 5           of those for now.

 6                  Thank you.  Thank you.  Assembly?  

 7                  CHAIRWOMAN WEINSTEIN:  So we go to 

 8           Assemblyman McDonald.

 9                  ASSEMBLYMAN McDONALD:  Thank you, 

10           Madam Chair.  

11                  Amanda, good to see you.

12                  ACTING COMMISSIONER HILLER:  Nice to 

13           see you.

14                  ASSEMBLYMAN McDONALD:  You know, tax 

15           policy is just so interesting.  Although the 

16           crowd here doesn't demonstrate that.  It's a 

17           little light in attendance.  And, you know, 

18           it's actually interesting because obviously 

19           we need revenue to support our operations, 

20           but it's always an exercise in human behavior 

21           too, because every change has an impact 

22           somewhere along the line.

23                  You know, there's been a lot of 

24           conversation going on about the policies we 


 1           put in place and people are going to leave 

 2           New York State.  And even though our 

 3           population's over 20 million people, so it's 

 4           grown over the last decade, there have been 

 5           conversations about people leaving.  And some 

 6           people are fearful that our policies cause 

 7           that problem.  I'm not saying I agree or 

 8           disagree.  

 9                  I guess my question -- and I loved 

10           your comment earlier about, you know, the 

11           Legislature and the Executive make the 

12           policies.  But does the department have a 

13           mechanism in place to actually measure if our 

14           policies are causing people to leave?  You 

15           know, particularly gets into the wealthy.  

16                  Do we -- I know it's not simple, by 

17           any stretch of the imagination.  But are we 

18           able to track how many millionaires and 

19           billionaires are leaving?  Is that something 

20           the department has the ability to do?

21                  I don't think it's a candid report, to 

22           be honest with you. 

23                  ACTING COMMISSIONER HILLER:  Certainly 

24           it's not a candid report.  You know, we are 


 1           absolutely aware of the conversation at large 

 2           about migration out of New York.  There are 

 3           media reports all the time about the U-Haul 

 4           vans going to Florida and the like.  And we 

 5           are certainly looking at migration as part of 

 6           our general analysis of other tax trends.  

 7                  I can say that, you know, we have 

 8           access to IRS data that runs through 2020, we 

 9           have access to state tax filing data that 

10           runs through tax year '21, and we see people 

11           leaving New York at a greater pace.  We saw 

12           the -- during 2020, the height of the COVID 

13           pandemic, we saw a higher level of 

14           outmigration than we had seen in previous 

15           years.  We saw that modulate in 2021.  We 

16           also saw some of the highest-income 

17           New Yorkers leaving at a greater rate in 

18           2021.  

19                  But we don't know yet what that's 

20           going to look like in 2022.  One year doesn't 

21           make a trend.  We know that people were 

22           responding to COVID in 2020, and we don't 

23           know yet whether people are going to be -- 

24           whether those trends are going to revert back 


 1           to historic levels in 2022.  We'll know that 

 2           better this time next year.  

 3                  But what I will say is that there's a 

 4           ton of data on our website.  We have tax 

 5           facts on our website that include income tax 

 6           and migration data and the like, that -- 

 7           where you see the trends that we're seeing.

 8                  ASSEMBLYMAN McDONALD:  I thank you for 

 9           that.  Only because from my perspective, 

10           there's a lot of good things we want to do 

11           for everybody throughout New York State, but 

12           we need all hands on deck.  And we need 

13           everybody doing their fair share.  

14                  Thank you.

15                  CHAIRWOMAN WEINSTEIN:  Thank you.  

16                  To the Senate.

17                  CHAIRWOMAN KRUEGER:  Senator 

18           Gounardes, second round, three minutes.  

19           Thank you.

20                  SENATOR GOUNARDES:  Thank you.

21                  Thank you again, Commissioner.

22                  Going back to my -- our favorite 

23           subject, you know, I just want to point out 

24           the state's tax credit for children exempts 


 1           children age zero to four, the neediest 

 2           children, children who are at the time when 

 3           they need it the most.  

 4                  It also does not allow for those with 

 5           the lowest incomes to receive the highest 

 6           value of the credit, which right now is only 

 7           capped at $500, which is very low.  The cap 

 8           itself is low, and it also excludes hundreds 

 9           of thousands if not millions of children 

10           because of their parents' immigration status.  

11                  So earlier there was an assertion made 

12           that New York State is overly generous with 

13           the child tax credit, or that we do a lot 

14           already.  And I think we can -- we do some.  

15           We can certainly do a lot more on that.

16                  I want to ask a technical question.  

17           You talked about the technological changes in 

18           the agency and how you're able to be more 

19           efficient and be able to do a lot more direct 

20           deposit and a lot more without having to mail 

21           checks back and forth.

22                  Does the agency right now have the 

23           ability -- or can the agency issue credits or 

24           refunds electronically at any time throughout 


 1           the year?  Or do they have to do it around 

 2           certain periods of time?

 3                  ACTING COMMISSIONER HILLER:  We don't 

 4           have that ability right now.  And I -- and 

 5           I'm not sure that we're -- if we're talking 

 6           about those same low-income family income 

 7           supports, like the child credit or the Earned 

 8           Income Tax Credit, I'm not sure whether we 

 9           will ever get to that place.  I think there 

10           are a range of challenges around that.  

11                  And first I want to clarify, I don't 

12           think our benefits are overly generous by any 

13           means.  But I do know that we are providing 

14           significant -- we spend significantly in 

15           those areas of our budget.  

16                  But one of the challenges that we have 

17           is that first there's a general problem of 

18           many of these families are being unbanked.  

19           And there's a -- there's I think a lot of 

20           bright people are thinking about how to 

21           address the challenges around families that 

22           are unbanked.  But we can't send an 

23           electronic direct deposit to somebody who 

24           doesn't have a bank account to receive it.


 1                  SENATOR GOUNARDES:  But we can send 

 2           someone a check in April, we can mail someone 

 3           a check in September, we can mail someone a 

 4           check in December, October.  We can also mail 

 5           a check, right?  We have the ability to send 

 6           out credits to people either via paper or 

 7           electronically at any point.  Or you're 

 8           saying maybe not for certain populations.  

 9                  But we don't lack for the ability to 

10           date a check in September and mail it out 

11           September 30th, right?

12                  ACTING COMMISSIONER HILLER:  We 

13           actually -- we mail checks out all through 

14           the year.  I think the -- there, the 

15           challenge is the structure that we're using 

16           to determine the eligibility for that credit.

17                  SENATOR GOUNARDES:  Sure.  And in my 

18           last 10 seconds, I appreciate your answer and 

19           I have to follow up with you on that.

20                  ACTING COMMISSIONER HILLER:  Okay.

21                  SENATOR GOUNARDES:  The childcare tax 

22           credit being proposed is based on what we 

23           enacted last year in New York City.  Do we 

24           have any data to show how that's worked in 


 1           New York City before we expand it statewide?

 2                  ACTING COMMISSIONER HILLER:  No.  

 3           Because the tax cycle just -- we're getting 

 4           those returns now.  It's going to be a year 

 5           or more before we know.

 6                  SENATOR GOUNARDES:  Thank you.

 7                  CHAIRWOMAN WEINSTEIN:  We go next to 

 8           Assemblyman Mamdani.

 9                  ASSEMBLYMAN MAMDANI:  Thank you.  

10                  In your testimony you write, quote:  

11           Many of the tax proposals in this budget 

12           address issues of equity and fairness. 

13                  In that same budget, the Governor has 

14           effectively proposed a fare hike for the MTA 

15           to $3.  Do you think a $3 fare is equal or 

16           fair?  

17                  ACTING COMMISSIONER HILLER:  I can't 

18           speak to that.  I really can't speak to that.

19                  ASSEMBLYMAN MAMDANI:  That's okay.  

20           I'll move on to the next question, in the 

21           interests of time.  

22                  A $3 fare places a disproportionate 

23           burden on lower- and middle-income 

24           New Yorkers to fund the MTA.  In economic 


 1           terms, would you characterize that as a 

 2           regressive policy?

 3                  ACTING COMMISSIONER HILLER:  I also 

 4           don't think I can speak to that.  I really 

 5           don't feel like I have enough information to 

 6           even begin to comment on that.

 7                  ASSEMBLYMAN MAMDANI:  On whether or 

 8           not a tax of service is a regressive policy?

 9                  ACTING COMMISSIONER HILLER:  I think 

10           it depends on the service.  I think it 

11           depends on a lot of factors.  And I really 

12           don't feel like I can speak to that.

13                  ASSEMBLYMAN MAMDANI:  Okay.  So I'll 

14           move on to taxes, then.

15                  ACTING COMMISSIONER HILLER:  Thank 

16           you.

17                  ASSEMBLYMAN MAMDANI:  In your 

18           testimony you justified the extension of the 

19           current corporate tax rates by saying that it 

20           keeps us, quote, competitive relative to 

21           rates in other states, and in particular to 

22           our neighbors.  

23                  The current tax rate you're referring 

24           to in New York is 7.25 percent.  But 


 1           New Jersey's corporate tax rate is at 

 2           11.5 percent.  The corporate tax rates 

 3           proposed by Senator Hoylman-Sigal and 

 4           Assemblymembers Kelles and Shrestha would 

 5           bring us closer to New Jersey's and raise 

 6           $9 billion in additional revenue, which would 

 7           be enough to freeze the fare at $2.75, fund 

 8           six-minute train service, make buses free 

 9           across New York City, and still have billions 

10           left over for other critical needs.  

11                  Would this not be appropriate policy?

12                  ACTING COMMISSIONER HILLER:  Again, my 

13           role is to administer the policy choices that 

14           you and your colleagues make with the 

15           Governor.  And if ultimately the policy 

16           choice is to change that tax rate, we will 

17           absolutely administer it.

18                  ASSEMBLYMAN MAMDANI:  You have no 

19           preference or ability to comment upon whether 

20           something is regressive or whether a certain 

21           amount of tax rate would then be able to be 

22           fund certain essential services?

23                  ACTING COMMISSIONER HILLER:  Look, 

24           certainly, if you have more revenue, you can 


 1           fund more services.  But you can also take 

 2           the same revenue and divide it differently to 

 3           fund different services.  

 4                  I think the State Budget is a large 

 5           budget; there are a lot of policy choices 

 6           represented in the budget every year.

 7                  ASSEMBLYMAN MAMDANI:  Thank you.  

 8                  As we close, I'd just like to point to 

 9           the five active proposals to tax the rich, 

10           which are all progressive policies, those 

11           that acknowledge that individual and 

12           corporate tax burdens should increase with 

13           your wealth.  We have a healthy, stable tax 

14           base that can expand through these proposals, 

15           especially, to quote you, as we face risks on 

16           the horizon.  

17                  Thank you very much.

18                  CHAIRWOMAN WEINSTEIN:  Thank you.

19                  Senate?  

20                  CHAIRWOMAN KRUEGER:  I believe we're 

21           done.

22                  CHAIRWOMAN WEINSTEIN:  We still have a 

23           few.  

24                  Assemblyman Manktelow.


 1                  ASSEMBLYMAN MANKTELOW:  Thank you, 

 2           Madam Chair.  

 3                  Commissioner, just a question back on 

 4           cannabis.

 5                  ACTING COMMISSIONER HILLER:  Sure.

 6                  ASSEMBLYMAN MANKTELOW:  So I was 

 7           looking through the budget, or the proposed 

 8           budget.  I see no revenue side for the sale 

 9           of cannabis.  Why is that?  Or am I just 

10           missing it?  

11                  ACTING COMMISSIONER HILLER:  You know, 

12           I don't know what the number is offhand, but 

13           I believe that the financial plan anticipates 

14           revenue from cannabis.  I don't know that 

15           number offhand, but I believe it's there.  

16                  It's not in our part of the budget, so 

17           I don't know that number offhand.  But I 

18           believe it's part of the financial plan that 

19           we will be receiving tax revenue from the 

20           cannabis taxes.

21                  ASSEMBLYMAN MANKTELOW:  Okay.  So I 

22           guess my second question is, as both Senators 

23           had made mention, you know, we have people 

24           that are expanding their businesses in our 


 1           districts selling cannabis, in any way they 

 2           possibly can.  What's going to happen with 

 3           that amount of sales?  Will we ever be able 

 4           to tax that?

 5                  ACTING COMMISSIONER HILLER:  You know, 

 6           I think that -- you know, so first, I would 

 7           say it's the early days of legal cannabis 

 8           sales in New York.  We've just had the first 

 9           couple of licensed cannabis shops opening up 

10           just in the last several weeks or the last 

11           couple of months.  

12                  And, you know, certainly there is 

13           clearly a demand for those stores.  The -- 

14           that hopefully, over time, will help move 

15           folks away from the illegal cannabis market 

16           that grew up before those legal stores were 

17           open.  

18                  The Tax Department -- if we ultimately 

19           receive the statutory authority to do so, the 

20           Tax Department will pursue cannabis 

21           enforcement the same way we pursue tobacco 

22           enforcement now.

23                  We don't have that authority now.  

24           But, you know, assuming we get that 


 1           authority, we will take that work on.

 2                  ASSEMBLYMAN MANKTELOW:  And if you do 

 3           receive that authority, how far back can you 

 4           go?

 5                  ACTING COMMISSIONER HILLER:  You know, 

 6           I think it's hard to go -- I mean, in terms 

 7           of the tax liability for the sales, folks are 

 8           finding clever ways to sell cannabis like 

 9           selling stickers and giving cannabis away 

10           with the stickers.  That sticker sale is 

11           subject to sales tax today.  And there's 

12           enforcement action around that that we can be 

13           taking, but it has to be taken in the course 

14           of ordinary sales tax enforcement actions.  

15                  There are -- those kinds of 

16           opportunities we have, we can go back several 

17           years.

18                  ASSEMBLYMAN MANKTELOW:  So we can go 

19           back for the stickers, but we can't go back 

20           for the cannabis.

21                  ACTING COMMISSIONER HILLER:  I think 

22           it's going to be harder to go back for the 

23           cannabis because we don't have the same kinds 

24           of information we might have about a 


 1           particular store's cannabis sales.  

 2                  The tax structure for cannabis is one 

 3           that is based on the amount of THC in a 

 4           product.  And that, I think, becomes more 

 5           challenging if what we're trying to do is 

 6           collect tax on the untaxed cannabis, unless 

 7           we actually have that untaxed cannabis in our 

 8           hands.

 9                  ASSEMBLYMAN MANKTELOW:  All right.  I 

10           appreciate your time.  Thank you.  

11                  Thank you, Madam Chair.

12                  CHAIRWOMAN WEINSTEIN:  Thank you.  

13                  We go to Assemblyman Ra.

14                  ASSEMBLYMAN RA:  Thank you.  

15                  Thank you, Acting Commissioner.

16                  Mr. McDonald actually covered the 

17           first thing I wanted to ask about, because I 

18           think we did talk about last year whether the 

19           department had any data about the increases 

20           in high-earner tax rates we had done back in 

21           2021.  And, you know, you said probably 

22           around the time this year, so I think you 

23           already detailed that, so I won't go back 

24           into that.


 1                  ACTING COMMISSIONER HILLER:  There's a 

 2           ton of information on our website.

 3                  ASSEMBLYMAN RA:  Yup, this is great.  

 4                  And I do want to say, by the way, 

 5           always -- your staff is always responsive to 

 6           constituent requests.  Obviously I know a lot 

 7           of us had to reach out in the fall with 

 8           rebate checks and all of that type of stuff, 

 9           so I do want to thank you for that.

10                  ACTING COMMISSIONER HILLER:  Thank 

11           you.

12                  ASSEMBLYMAN RA:  One of my colleagues 

13           actually asked if I could ask you a question 

14           regarding his proposal to extend the 

15           application deadline for the COVID-19 capital 

16           costs tax credit.  

17                  So I know there's still money out 

18           there for this program.  And the question he 

19           had was whether there's been any 

20           conversations or could be any conversations 

21           about maybe having some flexibility in that 

22           program where perhaps a -- I know it's meant 

23           for, you know, something a business had to do 

24           specifically to respond to COVID -- but for a 


 1           business that, say, planned some capital not 

 2           knowing what was coming and then all of a 

 3           sudden got hit with COVID and might be 

 4           needing assistance because of that.

 5                  ACTING COMMISSIONER HILLER:  Yeah, so 

 6           that credit -- first, you're right, there is 

 7           money left in that program.  And the proposal 

 8           is to extend the deadline out through 

 9           September.  

10                  You know, I'm not aware that there 

11           have been conversations along those lines, 

12           but I certainly -- I can't imagine that our 

13           economic development -- my economic 

14           development colleagues wouldn't be amenable 

15           to having conversations about whether or not 

16           that would be an appropriate extension or 

17           expansion of the credit.  

18                  I think certainly the intention here 

19           was to help businesses that experienced 

20           unexpected costs around their COVID response.

21                  ASSEMBLYMAN RA:  Okay.  And one of the 

22           I would say main tax-increase proposals in 

23           this budget is the cigarette tax increase.  I 

24           mean, look, I think anybody smoking 


 1           cigarettes at this point in 2023 -- I mean, 

 2           we're very well aware of all the risks.  But 

 3           I think these do tend to be regressive.  And 

 4           I know that our state has a huge problem with 

 5           black market sale of tobacco.  

 6                  So I'm just wondering what 

 7           resources -- and really, does the department 

 8           think you have enough resources if there was 

 9           to be even more black market sale of tobacco 

10           going on that you would have to try to crack 

11           down on so that the state's not losing that 

12           revenue.

13                  ACTING COMMISSIONER HILLER:  You know, 

14           so, one, I think that, you know, the problem 

15           of untaxed cigarettes in New York is a very 

16           real one, both cigarettes that are brought in 

17           from other states where the tax rates are 

18           lower -- and we also see some of our 

19           Native populations engaging in robust sales 

20           from their Nation lands.  

21                  And that's -- and that has been an 

22           important revenue source.  I think in 

23           Buffalo, you know, there were some tax 

24           studies that most of the cigarettes that were 


 1           being found were Native-brand cigarettes.  

 2                  I think those challenges are very 

 3           real, and certainly we are -- they are front 

 4           of mind at the Tax Department because we have 

 5           responsibility for enforcing the tobacco 

 6           taxes.  And it is -- there's never a shortage 

 7           of work in that area.  

 8                  I think that the proposal to increase 

 9           the tax is really about keeping cigarettes 

10           out of reach for young people, and that -- 

11           that that is an important but different 

12           policy goal.  And to some extent the revenue 

13           loss from the increase in the taxes is maybe 

14           I think a little beside the point, because 

15           the point of our tax structure right now is 

16           to keep cigarettes out of reach of young 

17           people.  And by increasing it, we're 

18           intending to do that.  

19                  I don't -- in that regard, I'm not 

20           sure that there's always an expectation that 

21           we're going to have all the revenue that 

22           would be associated with tobacco sales.  But 

23           there's a different policy goal at work.

24                  ASSEMBLYMAN RA:  Sure.  And certainly 


 1           that's a goal I share, and I think -- 

 2           actually, I think the state could do a lot 

 3           more in showing that goal is a priority when 

 4           you look at what we spend in tobacco 

 5           cessation as opposed to what -- a lot of 

 6           other states, and where many advocates 

 7           believe we should be.  

 8                  So thank you, Commissioner.

 9                  ACTING COMMISSIONER HILLER:  Sure.

10                  CHAIRWOMAN WEINSTEIN:  So I believe 

11           I'm the last one.  And some of the questions 

12           I was going to ask have already been asked, 

13           so that's why I go last.

14                  But just to follow up on what 

15           Assemblyman Zebrowski was asking, we would 

16           like to have real granular data as to the 

17           number of businesses that the mobility tax, 

18           the increase, the .16 percent mobility tax 

19           would impact.  And if that information could 

20           be broken down by the number of businesses in 

21           each county, each of the counties of the 

22           metropolitan commuter transportation mobility 

23           tax region.

24                  ACTING COMMISSIONER HILLER:  So I'm 


 1           not sure that I can break it down as 

 2           granularly as by county.  And that's because, 

 3           you know, these are payroll taxes, and an 

 4           employer that may be based in New York City 

 5           may have employees that are working in 

 6           different parts of the MTA region.  And so 

 7           just being able to pinpoint the location of 

 8           that business may not tell us where each of 

 9           those employees is working.  

10                  Unless -- so unless we're actually 

11           undertaking an audit of that particular 

12           employer, we aren't going to be able to 

13           determine whether they've gotten that right, 

14           how many of those employees were in each 

15           particular -- each particular county.  

16                  But we can ballpark it.

17                  CHAIRWOMAN WEINSTEIN:  The businesses 

18           that are within those various counties, that 

19           you have.

20                  ACTING COMMISSIONER HILLER:  Sure.  

21           But they're paying based on -- so a business 

22           that is based in Buffalo that has employees 

23           in the MTA region is paying tax on the 

24           employees that are working in that region, 


 1           even though if on paper that's a Buffalo 

 2           business.  

 3                  So it's a little hard to get that 

 4           granular.  We -- we can -- we can get kind of 

 5           window close, though.  We know that there are 

 6           about 450,000 businesses operating in the 

 7           MTA zone.  We believe about twenty of -- I 

 8           think 20,000 of them would pay the top rate.  

 9           That top rate would apply to businesses that 

10           have a weekly payroll of about $33,000 or 

11           higher in a weekly payroll.  

12                  And that that -- for a business at 

13           that level, which is the start of that tax 

14           bracket, that's about an additional $53 in 

15           tax on a $33,000 payroll.

16                  CHAIRWOMAN WEINSTEIN:  Okay.  Thank 

17           you.  

18                  And to follow up on -- I guess 

19           Senator Gounardes was talking about the 

20           corporate -- we've had a couple of people 

21           talking about the corporate tax.  Have you -- 

22           do you anticipate any behavioral changes in 

23           New York's corporate franchise taxpayers 

24           going forward if we continue the increased 


 1           rate?

 2                  ACTING COMMISSIONER HILLER:  You know, 

 3           I don't.  I don't think we anticipate that.  

 4           We're continuing a rate that is, as I said, 

 5           competitive with those of our neighbors.  We 

 6           are -- our tax rate is not as high as some of 

 7           our neighbors.  

 8                  And so I think that that -- we don't 

 9           expect that we would see changes in behavior 

10           as a result of that.

11                  CHAIRWOMAN WEINSTEIN:  And speaking of 

12           behavior, has the department seen any data 

13           that suggest that the high-income earners are 

14           leaving the state, based on the increase we 

15           did in the '21-'22 enacted budget?

16                  ACTING COMMISSIONER HILLER:  We've 

17           seen preliminary data that suggested that 

18           there was an immediate react -- that there 

19           was an uptick in outmigration of millionaires 

20           in what was the new highest tax bracket.  

21                  But I want to be clear:  One, we don't 

22           know whether that's a trend or whether that 

23           was a one-time spike.  And we don't know 

24           whether that has anything to do with taxes.  


 1                  You know, my own life experience says 

 2           that the decision to move is a really 

 3           complicated one.  You move for family, for 

 4           jobs, for affordability, for climate, for all 

 5           kinds of reasons.  And tax may be one of 

 6           those reasons, but we at the Tax Department 

 7           can't know that taxes were the reason that 

 8           that taxpayer left.  

 9                  So I can't say that there's -- that 

10           there's causality, but we do see that there 

11           was a spike in the highest income -- the 

12           taxpayers reporting the highest incomes in 

13           New York.

14                  CHAIRWOMAN WEINSTEIN:  And moving on 

15           to the pass-through-entity tax, which also 

16           was in the '21-'22 enacted budget, the 

17           concept was that it would be revenue-neutral 

18           over a two-year period of time.

19                  So now that we've had the full year 

20           collections, have you learned any more 

21           information about the effects that it's had 

22           on other tax collections and taxpayer 

23           behavior?

24                  ACTING COMMISSIONER HILLER:  So I 


 1           would -- I would say that the 

 2           pass-through-entity tax continues to surprise 

 3           me every day.  You know, it's a construct 

 4           that allows certain taxpayers to -- certain 

 5           business entities to pay their taxes 

 6           up-front, and then we reimburse the owners of 

 7           those businesses through an income tax 

 8           credit.

 9                  I think everybody was surprised by the 

10           scale with which entities enrolled and paid 

11           taxes in that first year, and that was right 

12           at the end of 2021.  And it was like 

13           11.8 billion, somewhere around there.  

14                  And then we would expect to see the 

15           credits going out to the owners of those 

16           businesses in tax year '22.

17                  The -- one of the things that I think 

18           we found surprising is that, you know, about 

19           20-something percent of the credits are being 

20           carried forward to outyears.  So they're 

21           still -- we're still on the hook to pay these 

22           credits, but we haven't paid them yet.  And 

23           that's two-point-something billion dollars 

24           just in those carry-forward credits, because 


 1           we're talking about an $11 billion swing from 

 2           the payments coming in from the entities and 

 3           then the credits going out to their 

 4           taxpayers.

 5                  I think overall the main thing it 

 6           speaks to is the impact of the SALT deduction 

 7           cap, because this is all about the SALT 

 8           deduction cap.  And we had estimated what 

 9           that might mean for New Yorkers, and it turns 

10           out that it really means a lot for 

11           New Yorkers.

12                  CHAIRWOMAN WEINSTEIN:  Thank you.  

13                  And I misspoke; I am not the last 

14           person to -- to speak.  I skipped over my 

15           colleague Assemblywoman Dickens, and she will 

16           be the last member of our panel to ask a 

17           question.

18                  ACTING COMMISSIONER HILLER:  Saved the 

19           best for last.

20                  ASSEMBLYWOMAN DICKENS:  Thank you so 

21           much, Chair.

22                  Thank you, Commissioner, for your 

23           testimony.

24                  ACTING COMMISSIONER HILLER:  Of 


 1           course.

 2                  ASSEMBLYWOMAN DICKENS:  I want to 

 3           commend you and thank you for the -- 

 4           hopefully you will roll out the STAR credits 

 5           by direct deposit, which will be a great 

 6           help.  

 7                  The other thing is on the SCRIE and 

 8           the DRIE.  I think that it's great that it 

 9           would be automatic, but it means sufficient 

10           notice must be given to the residents and the 

11           building owners in advance so that the 

12           credits can be applied.  That's the first 

13           thing.

14                  Has cannabis -- anticipated cannabis 

15           tax revenue been calculated at all in your 

16           projections?

17                  ACTING COMMISSIONER HILLER:  I believe 

18           that there is a line for cannabis revenue in 

19           the financial plan.  I have to say I can't 

20           speak to that specifically.  

21                  And, you know -- but I think that the 

22           financial plan documents show anticipated 

23           cannabis revenue in the financial plan.

24                  ASSEMBLYWOMAN DICKENS:  Thank you.  


 1                  Well, with the fall of the GDP 

 2           continually, even though there was a 

 3           rebounding for a short time in the third 

 4           quarter; with the fact that in New York City 

 5           small businesses have closed up, the 

 6           brick-and-mortar stores are leaving and 

 7           closing down, retailers, including the small 

 8           and some of the larger stores have closed up; 

 9           with the fact that in New York City there's 

10           at least a billion dollars in taxes annually 

11           lost because of the shopping that goes across 

12           the bridge -- even with the increase in the 

13           bridge cost, they go across the bridge and 

14           shop in New Jersey instead of New York -- 

15           we're aggressively talking about the 125 for 

16           pre-K, 250 for learning loss, et cetera, the 

17           24 billion commitment for education, health, 

18           et cetera.  

19                  But with the small businesses that are 

20           closing up that are losing -- that you will 

21           not this year be able to collect on audit 

22           cases because these businesses have paid and 

23           some -- many have gone out of business, what 

24           is the impact ongoing on this budget?  


 1           Because we're putting through numbers that I 

 2           think or it seems like to me that in outgoing 

 3           years is -- is going to be changed and 

 4           reduced rather than increased and enhanced.

 5                  ACTING COMMISSIONER HILLER:  Well, I 

 6           mean, I certainly think that, you know, the 

 7           Division of Budget is --

 8                  ASSEMBLYWOMAN DICKENS:  Can you speak 

 9           into the mic, please?  I'm sorry.  

10                  ACTING COMMISSIONER HILLER:  Oh, I'm 

11           sorry.  

12                  I believe the Division of Budget is 

13           forecasting an economic downturn, and I think 

14           there's ongoing concerns that New York's 

15           recovery has not been as robust as the 

16           national economy as a whole coming out of 

17           COVID.  

18                  So I think that all of those things 

19           are concerns that should make us cautious as 

20           we go forward.

21                  ASSEMBLYWOMAN DICKENS:  You know, with 

22           the -- you know, there's an increase in 

23           unemployment and it's projected to be an 

24           ongoing increase in unemployment.  And even 


 1           though they talk about in 2024 there being a 

 2           rebounding, history has shown that it is 

 3           doubtful that a rebounding will occur in full 

 4           or even partially in 2024.  

 5                  With that, I'm seriously concerned 

 6           about the budget that's being put through for 

 7           taxation that may not be realistic to the 

 8           people.

 9                  Thank you.

10                  CHAIRWOMAN WEINSTEIN:  So I think 

11           we'll leave the -- we'll leave it on that 

12           note.  How does that sound?  

13                  ACTING COMMISSIONER HILLER:  That's 

14           fine.

15                  CHAIRWOMAN WEINSTEIN:  So, 

16           Commissioner Hiller, thank you so much for 

17           being here.  There may be a little bit of 

18           follow-up --

19                  ACTING COMMISSIONER HILLER:  Of 

20           course.

21                  CHAIRWOMAN WEINSTEIN:  But we are -- 

22           there are no further questions from the 

23           legislators.

24                  So we actually have just one panel 


 1           this year on taxes, and I'd like to call them 

 2           down:  New York City Democratic Socialists of 

 3           America; Center for Popular Democracy; and 

 4           Fiscal Policy Institute.  

 5                  And just as the three of you come to 

 6           the table, a reminder that all of your 

 7           testimony was received in advance, was 

 8           distributed to the legislators.  Don't read 

 9           your testimony, because you'll never get to 

10           the end of it.  

11                  And then there'll be like -- there may 

12           be some questions from members of the panel.

13                  Yes, if you can begin.

14                  MS. EISNER:  Oh, so I just begin, 

15           okay.  

16                  Hi, everyone.  Thank you for having me 

17           here.  My name is Emily Eisner.  I'm a Ph.D. 

18           economist educated at the University of 

19           California at Berkeley, with a focus on 

20           public finance and macroeconomics. 

21                  I was advised and have worked closely 

22           with Christina Romer, who was the chair of 

23           the White House Council of Economic Advisors 

24           under Barack Obama, and Emi Nakamura, who was 


 1           a 2019 Clark Medal winner, and that's an 

 2           annual award celebrating economic 

 3           researchers, many of whom go on to win Nobel 

 4           Prizes in economics.

 5                  Before getting a Ph.D., I worked at 

 6           the Federal Reserve Bank of New York in the 

 7           financial research group on issues of 

 8           macroprudential financial regulation and 

 9           monetary policy implementation.

10                  Today I'd like to emphasize a few 

11           points from my written testimony that are 

12           worthy of your consideration.  

13                  First, two recent polls have shown 

14           that between 75 and 85 percent of New Yorkers 

15           believe that the rich should pay higher 

16           taxes.  That is to say that 75 to 85 percent 

17           of your constituents want to raise taxes on 

18           the wealthy to pay for public goods and 

19           services that make their lives better.  

20                  These polling data match the national 

21           and global movement to increase taxation on 

22           top earners by reforming tax laws and closing 

23           tax loopholes that allow the wealthy to pay 

24           less in taxes proportional to their income.


 1                  New York has a strong, healthy tax 

 2           base that can sustain higher tax rates on top 

 3           earners and corporations.  The state is home 

 4           to one of the most beloved cities in the 

 5           world, with incomparable amenities, making it 

 6           a state that could truly lead a movement of 

 7           fair taxation.

 8                  Not only that, by raising taxes that 

 9           would afford the state the ability to improve 

10           upon public amenities like the MTA and 

11           childcare, New York would strengthen its 

12           desirability as a place to reside, thus 

13           strengthening the tax base and the welfare of 

14           all New Yorkers.

15                  Okay.  Number two, income inequality 

16           in New York has grown by between 10 and 

17           30 percent since the year 2010 in all of the 

18           top 10 largest counties in the state.  Income 

19           inequality is associated with lower life 

20           expectancies, worse health and well-being, 

21           and heightened social ills like violence.  

22                  As the most unequal state in the 

23           country, New York has the second-highest 

24           homelessness rate, is 29th in terms of child 


 1           well-being, 39th in terms of public hospital 

 2           safety, 49th in state and local education 

 3           funding equity, and nearly half of all 

 4           New Yorkers report trouble paying their 

 5           regular expenses on any given week.

 6                  At the same time, if New York were a 

 7           country, it would be the 10th richest country 

 8           in the world.  On a per-capita basis, 

 9           New York is wealthier than the countries of 

10           Norway, Denmark and Sweden, countries that 

11           have demonstrated the capacity for robust 

12           social services.  

13                  Thus there is no reason, given 

14           New York's economic standing, that the state 

15           should settle for less than number-one in 

16           most economically just and robust in the 

17           country.  

18                  Number three, in the past three years, 

19           New York families have had to manage their 

20           way through a global pandemic while 

21           New York's millionaires and billionaires -- 

22           okay, cool.  Look forward to answering 

23           questions.

24                  CHAIRWOMAN WEINSTEIN:  So as we said, 


 1           we do have your written testimony.  As I said 

 2           before.  Three minutes goes fast, so just get 

 3           into the meat of the points you want to make.

 4                  Yes, please go.

 5                  MR. KHAN:  Good afternoon, and good to 

 6           see you all.  My name is Charles Khan.  I am 

 7           the campaign coordinator for the Center for 

 8           Popular Democracy.  I coordinate our state 

 9           and local tax campaigns.  And it's very good 

10           to be here with you today.

11                  As you all have my testimony, I just 

12           want to point to a couple of different things 

13           in looking at the Governor's proposal for a 

14           budget.

15                  First, I did want to reiterate what 

16           the other panelist had to say, is that taxes 

17           on wealthy people in New York are very, very 

18           popular.  When the Legislature moved and did 

19           that in 2021, we saw that eight out of 10 

20           New Yorkers supported that.  There was a poll 

21           that was released to say that still says 

22           eight of out 10 New Yorkers do that.

23                  And I know that there's going to be a 

24           lot of debate around who's moving where and 


 1           for what reason.  But I do want to point to I 

 2           think a figure that's really, really 

 3           important when we think about state tax 

 4           policy.  Right?  Because the purpose of state 

 5           tax policy is to generate public money that 

 6           we can invest to make people's lives easier.

 7                  And since we increased the income tax 

 8           in New York State on folks that make more 

 9           than $5 million a year and corporations that 

10           make more than $5 million in profits a year, 

11           we have beaten tax estimates every single 

12           quarter.  Just last year New York State tax 

13           receipts were 37 percent above estimates.  

14           That's billions and billions of dollars.

15                  And the Legislature, because of that, 

16           has been able to make record investments in 

17           public education, make record investments in 

18           childcare, and do sort of the job that 

19           New Yorkers want us to do.

20                  And so that is really I think where 

21           the focus is.  And also it's a path for how 

22           we can move forward.  I think what we've seen 

23           in this budget and what we've seen covered in 

24           the media and the press is that affordability 


 1           is a deep, deeply felt issue for New Yorkers 

 2           across the board.

 3                  And so the question is, what are we 

 4           going to do to make New York more affordable 

 5           for working-class people?  Because what we're 

 6           seeing at the very, very top of the income 

 7           scales is that those folks are making more 

 8           money than ever.  Across the country, 

 9           corporate profits are at an all-time high.

10                  And so when we ask about what are we 

11           doing about affordability, and I look at the 

12           Governor's budget, I would say that raising 

13           fares on the MTA is not, is not making 

14           New York more affordable.  I notice that 

15           she's not raising taxes on working -- income 

16           taxes.  But by raising MTA fares, that means 

17           everyone that takes public transit in 

18           New York City is paying more.  

19                  By raising the tuition at public 

20           universities in New York, that means every 

21           college student is paying more.  And by 

22           raising a payroll tax, that is going to be a 

23           tax on workers.  

24                  Payroll taxes by far are the easiest 


 1           taxes for a business to pass on to the 

 2           worker, and that is what history has shown 

 3           us. 

 4                  And so all of these methods are 

 5           raising costs on New Yorkers.  But we have a 

 6           job to do, and so the question is how do we 

 7           do that job.  And I think the clear answer 

 8           from the population is that raising taxes on 

 9           the wealthy is the way to go, particularly 

10           corporations.  The Governor's extension of 

11           the corporate tax is -- for three years is 

12           nice, but it should be permanent.  And 

13           because folks are bringing record profits at 

14           the corporate level, there's a lot of room to 

15           add there and really invest at the scale that 

16           New Yorkers are asking us to do.

17                  CHAIRWOMAN WEINSTEIN:  Thank you.

18                  Yes?

19                  MR. GUSDORF:  All right, thank you.  

20                  My name is Nathan Gusdorf.  I'm the 

21           executive director of the Fiscal Policy 

22           Institute.  Prior to coming to FPI, I was a 

23           tax attorney and worked in the tax department 

24           of Weil, Gotshal & Manges in New York City. 


 1                  So let's start with a little bit of 

 2           context.  It's possible that we're headed 

 3           into a mild recession.  In the alternative, 

 4           we'll see what they call a soft landing.  

 5           Either way, it would be particularly 

 6           important that we focus on social spending at 

 7           this time.

 8                  At a national level we've seen two 

 9           recessions in the past decade -- the 

10           recession after the Great Financial Crisis 

11           and the recession caused by COVID.  

12           Constrained spending at the federal 

13           level forced the national economy to take 

14           about 10 years to recover after the financial 

15           crisis.  

16                  Conversely, you saw that the Biden 

17           Administration stimulus during COVID really 

18           shortened the recovery period and put us into 

19           a much better economic position.

20                  How's our population doing?  Well, as 

21           we just heard from the commissioner, we have 

22           seen significant outmigration from the -- 

23           basically during the pandemic period and in 

24           the immediate post-pandemic period.  


 1                  Recently FPI did an analysis of those 

 2           migration patterns, and we compared the 

 3           savings on housing and rental costs to the 

 4           savings on taxes.  And we found that on 

 5           average, the savings from housing and rental 

 6           costs were about 15 times greater than any 

 7           savings on taxes.  You'll see that people 

 8           routinely move out of New York into 

 9           Connecticut and New Jersey, which are 

10           basically states with comparable tax 

11           structures.

12                  Meanwhile, there's significant poverty 

13           in the state and significant inequality.  I'm 

14           going to -- be happy to take questions on 

15           that, but I want to move into talking about 

16           what I think the Legislature and the Governor 

17           should be thinking about in terms of new 

18           revenue options.

19                  So first of all, the personal income 

20           tax, even though we recently had rate 

21           increases on the highest earners, is still 

22           pretty flat for the majority of taxpayers.  

23           It's pretty flat from about $200,000 to a 

24           million dollars.  


 1                  And the rates on the highest earners 

 2           could be considerably more progressive.  

 3           That's where about 60 percent of our revenue 

 4           comes from.  It's the best source if we need 

 5           to pay for more stuff, and it really should 

 6           be the go-to tax policy option for funding 

 7           social spending.

 8                  At the same time, there are a number 

 9           of specific proposals that we could think 

10           about, such as a state surtax on long-term 

11           capital gains, which get a significant 

12           federal benefit.  We've done some revenue 

13           estimates on options there which I'm happy to 

14           talk about.

15                  We also need to think about business 

16           taxes in the suite of tax policy options that 

17           are available to the state.  Despite the 

18           corporate rate extension, there's still a lot 

19           of room to grow the corporate tax base and 

20           our corporate tax revenue, including by 

21           conforming to the GILTI provisions of the 

22           2017 federal tax law that tax multinational 

23           profit shifting.  And we can also, on the 

24           non-corporate business side, reduce the 


 1           rebate amount for the pass-through-entity 

 2           tax, just enough that people still elect into 

 3           the tax but the state could pick up a 

 4           billion, billion and a half dollars.

 5                  Finally, we should discuss wealth 

 6           taxation, particularly the taxation of 

 7           unrealized capital gains.

 8                  CHAIRWOMAN WEINSTEIN:  Thank you.  

 9                  Members, any questions?  

10                  Assemblyman Mamdamni -- sorry, 

11           Mamdani.

12                  ASSEMBLYMAN MAMDANI:  Thank you.

13                  And Chair, just to confirm, is it 

14           three minutes for the entire panel or three 

15           minutes per panelist?  My question.  

16                  CHAIRWOMAN WEINSTEIN:  Three total.  

17           Three minutes.

18                  ASSEMBLYMAN MAMDANI:  Okay.  

19                  Thank you very much.  My first 

20           question is for Dr. Eisner.  

21                  Just connecting a little bit to your 

22           testimony, is there any significant risk that 

23           higher earners will leave the state if we 

24           raise taxes on them?


 1                  MS. EISNER:  I believe this came up in 

 2           the last panel.  But the evidence that I've 

 3           looked at is that the most recent sort of 

 4           working paper on this subject looks really 

 5           closely at tax migration looking at the SALT 

 6           cap that was invoked in I guess 2018, and 

 7           basically shows that there is almost no tax 

 8           migration in response to the change -- the 

 9           relative change in state tax burdens around 

10           that policy change.

11                  To the extent that we've seen changes 

12           since 2020, a lot of that is being explained 

13           by the 2020 COVID-19 pandemic.  And we would 

14           expect to see sort of return to some 

15           normalcy.

16                  ASSEMBLYMAN MAMDANI:  So you're saying 

17           as a result of the pandemic, we can't really 

18           isolate the factors of tax revenue, but prior 

19           to the pandemic we have the evidence of the 

20           SALT cap and we didn't see any impact on the 

21           migration of high earners.

22                  MS. EISNER:  Correct.

23                  ASSEMBLYMAN MAMDANI:  Thank you.  

24                  To Mr. Gusdorf, a quick question.  The 


 1           Fiscal Policy Institute recently released a 

 2           report stating that New York is losing 

 3           working-class New Yorkers as a result of 

 4           astronomical housing costs, not as a result 

 5           of changes to the tax code.

 6                  Can you describe the findings related 

 7           to this report?

 8                  MR. GUSDORF:  Sure, thank you.  That's 

 9           the report that I mentioned briefly about 

10           comparing housing savings and tax savings.

11                  So a few of the highlights would be 

12           that, on average, mortgage costs went down 

13           just over $18,000 for people who moved out of 

14           the state, whereas their tax savings were 

15           about $1200.  Rental costs went down, I 

16           believe over about $5,000 for families that 

17           moved out that were renters.  

18                  The other important dynamic to think 

19           about in the context of that report is that 

20           the New York City metro area is the kind of 

21           relevant economic sphere, but that includes 

22           suburbs in New Jersey and Connecticut.  So a 

23           significant number of the people moving out 

24           of state were moving to those suburbs, not 


 1           moving to low-tax jurisdictions.

 2                  ASSEMBLYMAN MAMDANI:  Thank you very 

 3           much.  

 4                  And just a follow-up on different 

 5           reports specific to capital gains taxes in 

 6           New York.  So in New York State currently 

 7           capital gains are taxed at the same rate as 

 8           income.  Why should taxpayers who earn 

 9           capital gains income be made to pay at a 

10           higher rate?

11                  MR. GUSDORF:  The basic theory of this 

12           policy is that there's a very significant 

13           federal tax benefit for capital gains that 

14           overwhelmingly flows to the wealthy and the 

15           ultrawealthy.  And it's actually rational for 

16           states to respond to bad federal tax policy 

17           with reasonable surtaxes that offset that 

18           benefit to the benefit of state revenues.

19                  ASSEMBLYMAN MAMDANI:  Thank you very 

20           much.

21                  CHAIRWOMAN KRUEGER:  Thank you.  

22                  Senator Gounardes.

23                  SENATOR GOUNARDES:  Thank you.

24                  Earlier there was a discussion made 


 1           about how -- I think a helpful point -- in 

 2           every quarter since we raised revenue, taxes 

 3           a few years ago, New York saw their tax 

 4           receipts grow.  Some would say that's because 

 5           of the way New York's economy is able to 

 6           capitalize on the highs of the wave, but 

 7           sometimes on the way down we might hit the 

 8           lows of the low.  

 9                  I'd love to hear your comment or 

10           response to that.

11                  MR. KHAN:  So I think that's true of 

12           any tax code, and it's reflective of how 

13           unequal New York is.  Right?  New York has 

14           the highest concentration of wealth in the 

15           country.  It has the worst inequality in the 

16           country.  

17                  So any tax that we build that's 

18           progressive -- and that means that, say, the 

19           people and the corporations that reap the 

20           most from New York should put the most back 

21           in.  Any tax that's built that way, which I 

22           would say is the smart way, is going to reap 

23           the most benefit when the highs are high, and 

24           we're going to see some drop-off when the 


 1           lows are low.

 2                  SENATOR GOUNARDES:  Thank you.

 3                  There was also mention made about the 

 4           relative flatness of the personal income tax 

 5           over $200,000.  What would you -- I'm sure 

 6           all three of you have, you know, studied 

 7           this.  What do you project, either 

 8           collectively or individually, New York could 

 9           raise or could earn if we created more 

10           progressivity in the personal income tax  

11           rates at higher levels?

12                  MR. GUSDORF:  So the Fiscal Policy 

13           Institute will be releasing a report on this 

14           relatively soon; we're still conducting the 

15           analysis.  But we looked at restoring a 

16           $500,000 bracket from about 10 to 12 years 

17           ago.  And I'll follow up on the details.  

18                  I think that that could produce about 

19           another $500 million.  

20                  SENATOR GOUNARDES:   Okay, thank you.

21                  And there are lots of areas that this 

22           budget invests in, lots of areas that it 

23           doesn't invest in.  In your opinions, where 

24           do you see the home run for investment and 


 1           where do you see the swing and the miss for 

 2           no investment or disinvestment?

 3                  MR. KHAN:  So I would say -- I was 

 4           here for the Economic Development 

 5           conversation, and I think childcare, public 

 6           education, that's where we're going to get 

 7           the biggest return on our dollar.  And so 

 8           that's a great place to invest.  

 9                  And I think as Nathan pointed to, 

10           housing costs are really, really, really 

11           high.  And so as much as we can actually 

12           invest to create affordable housing -- and I 

13           don't mean that in the form of tax breaks for 

14           wealthy developers; we've seen how 421-a did 

15           not work.  

16                  But as much as we can invest in 

17           actually building affordable housing, deeply 

18           affordable housing that stays affordable, I 

19           think all of those things are things that are 

20           going to help the economy by our being able 

21           to keep workers here because they can afford 

22           to live here, and we're going to see sort of 

23           -- in some cases 12-fold return on the 

24           investment.


 1                  MS. EISNER:  And to the extent that 

 2           421-a is a tax break, it will -- it is a 

 3           swing and a miss.  It is giving handouts to 

 4           wealthy developers and producing inequality 

 5           further.

 6                  SENATOR GOUNARDES:  Thank you.

 7                  CHAIRWOMAN KRUEGER:  Assembly.  

 8                  CHAIRWOMAN WEINSTEIN:  Assemblyman Ra.

 9                  ASSEMBLYMAN RA:  Thank you.

10                  Mr. Gusdorf, you mentioned, you know, 

11           that there are 60 percent of our PIT revenues 

12           coming from that kind of class of taxpayers 

13           in that window.  

14                  I guess my question is, one of the 

15           arguments that's been made over the years is 

16           that that leads it to be somewhat unsteady, 

17           especially when you get into more difficult 

18           times because you're reliant on a small set.  

19           And, you know, we've seen in the past -- you 

20           know, back in 2008 -- our revenues 

21           plummeting.  

22                  So why is that not a concern to 

23           perhaps increase the share that that small 

24           window of taxpayers would be paying?


 1                  MR. GUSDORF:  Yeah, thank you.  I 

 2           mean, this is an important thing to think 

 3           about, and I think there are a few different 

 4           tax policy principles and purposes that we 

 5           have to keep in mind.  

 6                  So the fundamental one -- maybe the 

 7           fundamental two -- are really stability and 

 8           progressivity.  It's important that the 

 9           burden be distributed fairly, and it's also 

10           important that we have sustainable revenues.  

11                  I think in a way the short answer is 

12           just that the rich in New York are so rich 

13           that they're going to end up bearing a lot of 

14           the tax burden.  And the only way to change 

15           that would be to seriously undertax them.  

16                  And so we have to have other ways to 

17           ensure fiscal stability, and one of them is 

18           think about how we deal with reserves, 

19           particularly around, say, income streams that 

20           tend to fluctuate more, such as capital 

21           gains.  So while we think it would be 

22           rational to have a capital gains tax policy 

23           that composes a state surtax, that would also 

24           be a revenue stream that you'd want to make 


 1           sure, you know, does not jack up recurring 

 2           spending only in the years when you have high 

 3           capital gains receipts.  

 4                  But it would be a great revenue stream 

 5           to try to spread over multiple years.  Some 

 6           years you have really high bonuses due to 

 7           really high transactional activity.  There's 

 8           no reason to artificially reduce the tax 

 9           rates on that income just because you're 

10           worried about the fickleness of it.  But you 

11           can still have a pro-stability policy.

12                  ASSEMBLYMAN RA:  Well, I'm not 

13           necessarily saying reduce it, but I am saying 

14           that increasing that share that they make up 

15           is what concerns me.

16                  MS. EISNER:  May I interject a moment?

17                  ASSEMBLYMAN RA:  Oh, sure.

18                  MS. EISNER:  Another reason why this 

19           is -- your question is important is that 

20           raising taxes on the rich -- currently in 

21           New York inequality has created a massive 

22           misallocation problem in economic terms.  

23           We're not investing in the right people and 

24           the right infrastructure.  


 1                  By raising taxes on the rich we will 

 2           increase education, which ultimately will 

 3           provide a better tax base and more robust tax 

 4           base over the long run.

 5                  ASSEMBLYMAN RA:  So I was going to ask 

 6           another question; I don't have time.  But I 

 7           would just state one of my --

 8                  CHAIRWOMAN WEINSTEIN:  (Mic off; 

 9           Inaudible.)

10                  ASSEMBLYMAN RA:  I'm not sure.  Well, 

11           no, it's a nongovernmental -- but just in 

12           terms of, you know -- you know, I completely 

13           lost my train of thought as you were asking 

14           it, so --

15                  (Laughter.)

16                  ASSEMBLYMAN RA:  So I -- it was a ploy 

17           to make me lose my train of thought.

18                  Oh, what I was going to say, just, you 

19           know, one of the numbers we look at -- 

20           obviously we've seen, right, there's a lot of 

21           people doing really well right now.  But in 

22           terms of our share of millionaires, it's been 

23           going down and we've seeing more of it in 

24           some of those other, you know, states that 


 1           people tend to talk about, the Floridas and 

 2           the Texases.  

 3                  But I thank you guys for being here 

 4           today, and your patience.

 5                  CHAIRWOMAN WEINSTEIN:  Thank you.  

 6           Sorry.  Assemblyman Zebrowski --

 7                  CHAIRWOMAN KRUEGER:  No, we go back to 

 8           Senators.

 9                  CHAIRWOMAN WEINSTEIN:  Oh, okay.

10                  CHAIRWOMAN KRUEGER:  You're getting 

11           tired, it's okay.

12                  CHAIRWOMAN WEINSTEIN:  Thirty, almost 

13           40 hours of hearings.  Its sort of grinds at 

14           you.

15                  CHAIRWOMAN KRUEGER:  I know.  

16                  Senator Murray.

17                  SENATOR MURRAY:  Thank you.  And thank 

18           you, Chairwoman.  

19                  And thank you for being here.  

20                  I'm going to kind of piggyback on 

21           where Assemblyman Ra just left off when he 

22           talked about the wealthy leaving.  

23                  So I guess it depends on where we're 

24           getting our information.  I'm looking at an 


 1           article on "Moneywise" from Yahoo News from 

 2           just about two weeks ago that says:  "Between 

 3           2019 and 2020 the number of New Yorkers 

 4           earning between $150,000 and $750,000 fell by 

 5           nearly 6 percent.  Moreover, the number of 

 6           real high earners, those making over 

 7           $750 million, dropped by nearly 10 percent 

 8           during that same period.  Some speculate the 

 9           wealthy elites are leaving because of the 

10           state's high tax rates."

11                  But it goes, for perspective:  "The 

12           41,000 filers in the city's top 1 percent pay 

13           more than 40 percent of all the income taxes.  

14           The 450,000 filers in the top 10 percent pay 

15           about two-thirds of all the income taxes."  

16                  In other words, the remaining 

17           90 percent of taxpayers contribute about 

18           one-third of the city's income tax revenue.

19                  And I had heard you mention that a lot 

20           of them are leaving for New Jersey or 

21           Connecticut.  Again, according to this 

22           report, the wealthy are going to -- the top 

23           two states -- Florida and Texas.  

24                  But I also want to point this out.  


 1           Have you calculated in your figures and your 

 2           statistics the philanthropic aspect of it?  

 3           Because while the federal government's taken 

 4           a lot of incentives away as far as giving tax 

 5           breaks for donating, there are still 

 6           donations being made by the wealthy to 

 7           libraries and hospitals and not-for-profits.  

 8           When they leave the state, they're taking 

 9           those donations with them too.  

10                  Have you figured into your figures how 

11           that affects the -- you know, those that 

12           aren't wealthy or well-to-do?

13                  MR. GUSDORF:  So at least from FPI's 

14           perspective, I don't think that we -- we 

15           haven't looked at that data.  I don't know if 

16           we have access to that data.  On the top of 

17           the report, is that -- that sounds like it's 

18           city data, like it's IBO data.

19                  SENATOR MURRAY:  That one was from the 

20           city, yes.

21                  MR. GUSDORF:  Yeah, because we looked 

22           at those numbers and a lot of the people -- a 

23           lot of the -- we don't have state data on who 

24           earns on the $750,000 bracket, but the city 


 1           data showed that a lot of those people were 

 2           moving upstate.  So that was really movement 

 3           out of the city during the pandemic, the sort 

 4           of movement that doesn't affect the state's 

 5           tax base, and that we would also expect to 

 6           change -- 

 7                  SENATOR MURRAY:  These figures said 

 8           out of state, the 10 percent were out of 

 9           state.  That they went to Florida and -- 

10           well, they didn't say all of them went to 

11           Florida and Texas.  They said the top two 

12           states were Florida and Texas.  But the 

13           10 percent moved out of New York.

14                  MR. GUSDORF:  Yeah, they also say that 

15           that's -- that the Florida and -- I mean, I 

16           don't know what that article is, but I know 

17           that we looked at IBO data on highest earners 

18           and we also have looked at the migration 

19           patterns, and it's -- I think that's not 

20           consistent with the other sources that we've 

21           seen, to say that the top two states are 

22           Texas and Florida.

23                  SENATOR MURRAY:  I've heard different 

24           as well.


 1                  MS. EISNER:  And I would say that 

 2           the -- you know, like the top line of 

 3           economic research on this suggests that tax 

 4           migration out of the state in 2020 made up 

 5           0.75 percent of the population earning 

 6           $500,000 or more.  So it's a tiny percent.  

 7           And each additional percent of raise in taxes 

 8           is causing on the order of 10 individuals to 

 9           leave, at most.  So --

10                  SENATOR MURRAY:  I think that was 

11           during the pandemic too, when they --

12                  MS. EISNER:  That's at the max, yeah, 

13           that's --

14                  CHAIRWOMAN KRUEGER:  Thank you.  

15           Sorry.

16                  Assembly?  

17                  CHAIRWOMAN WEINSTEIN:  We go to 

18           Assemblyman Zebrowski.

19                  ASSEMBLYMAN ZEBROWSKI:  Thank you.  

20                  This is a balance, right?  To try to 

21           balance the right amount of taxation with the 

22           right amount of services to foster the most 

23           robust economy we can.

24                  I'm interested whether your position 


 1           is that there is no point of diminished 

 2           return in your data or that we just haven't 

 3           reached it yet.

 4                  MS. EISNER:  The evidence would 

 5           suggest that we most certainly have not 

 6           reached the point of diminishing returns yet.  

 7           Absolutely, we have not.  In fact, when 

 8           states have lowered taxes to try to bring in 

 9           wealthy people, that has diminished state 

10           revenues.  So if anything, the mistake that 

11           could be made is to lower taxes.

12                  And to the question about is there a 

13           point of diminishing returns, I think -- if 

14           you're talking about state policy, I think 

15           unfortunately we live in a world where there 

16           is a race to the bottom on state taxes.  That 

17           is why multiple states currently are 

18           collaborating to try to create a wealth tax 

19           on unrealized capital gains so that there is 

20           a sort of nationwide agreement and not this 

21           like race to the bottom that hurts everyone.

22                  But I don't think that that's even 

23           really a relevant question, because we're so 

24           far from the point of diminishing return.


 1                  ASSEMBLYMAN ZEBROWSKI:  Well, that was 

 2           sort of my second question, is like do you -- 

 3           when you testify, you know, before the 

 4           Legislature and talk to legislators, do you 

 5           attempt to try to identify what you think is 

 6           the appropriate level of taxation?  Because 

 7           certainly New York isn't at the bottom or 

 8           even at the middle in terms of taxes, right?  

 9           We're towards the high.  

10                  So, you know, what do you try -- sure, 

11           go ahead.  What do you try in terms of 

12           setting what the right number is?

13                  MR. KHAN:  Yeah, so I don't 

14           necessarily think we try and set the right 

15           member.  But Dr. Cristobal Young, a Cornell 

16           professor -- he also worked in the Biden 

17           administration -- he studied all of the 

18           federal tax data from 1960 until about the 

19           year 2000.  And he's a sociologist by trade, 

20           so he looked at why, if millionaires do move, 

21           like what does the millionaire migration look 

22           like.  

23                  And ultimately he said that 

24           millionaire migration due to taxation is 


 1           very, very little.  And that in order -- and 

 2           because the majority of high-income earners 

 3           stay, you would have to raise the tax rate in 

 4           any particular state almost 25 percent to get 

 5           to a level of diminishing returns.

 6                  ASSEMBLYMAN ZEBROWSKI:  I've only got 

 7           20 seconds left.  That would be interesting.  

 8           You know, maybe you could send me that study.

 9                  MR. KHAN:  Absolutely.

10                  ASSEMBLYMAN ZEBROWSKI:  My question 

11           is, you know, when we look at some of the 

12           proposed taxes and you talk about a wealth 

13           tax, I mean, that would be a significant tax 

14           that's never been tried before or studied 

15           before.  Right?  No other state has done 

16           that.  So how would we know?

17                  MR. GUSDORF:  It's a cliff-hanger.

18                  MS. EISNER:  We can follow up with 

19           information.

20                  ASSEMBLYMAN ZEBROWSKI:  Okay.  Thank 

21           you.

22                  MR. GUSDORF:  Well, it's hard to know 

23           with the wealth tax.  But the estimates are 

24           really about income taxes.  And it's a lot 


 1           higher than anybody thinks, basically.  

 2                  CHAIRWOMAN WEINSTEIN:  Thank you.  

 3                  We're going to go to the Senate.

 4                  CHAIRWOMAN KRUEGER:  Thank you.  

 5                  And I think I'm closing for the 

 6           Senate.  

 7                  So we've had lots of discussion, both 

 8           in Economic Development and here, about tax 

 9           rates and who are they affecting and who's 

10           doing what.

11                  My question is, do we really need to 

12           just evaluate a new approach to how we tax?  

13           Because the world has changed so much, the 

14           models of business have changed so much.  

15                  Just three quick examples.  Helene and 

16           I have been trying to get a bill signed by 

17           the Governor that would go after basically 

18           out-of-state corporations and wealthy 

19           individuals who just don't pay their taxes in 

20           New York even though they're making their 

21           money here in New York.  And we're having 

22           trouble just getting that simple concept of 

23           tax cheaters ought to have to pay their 

24           taxes.  And that does so much harm to 


 1           everyone's belief in the tax system being 

 2           fair.

 3                  We have a world where these -- excuse 

 4           me, these new kinds of companies, Uber, Lyft, 

 5           others, they don't pay taxes, they don't pay 

 6           into unemployment for their workers, they owe 

 7           government, in my opinion, unbelievable 

 8           amounts of money.  When I was here today 

 9           Britain was declaring they're going after 

10           Uber for the VAT they owe them -- the exact 

11           same issues, different country.  

12                  And then a few of us actually have 

13           bills recognizing that the whole world is now 

14           taking our personal data, selling it, making 

15           a fortune, but we don't tax that.  And of 

16           course we don't have brick-and-mortar stores; 

17           everybody buys online.  So don't we need to 

18           just completely reevaluate what we fail to 

19           tax?  Because there's a whole lot of money 

20           there on the table I believe we should be 

21           getting.  We're not.  And then we fight over 

22           who's paying what rate when there's all this 

23           money out there that we should be getting 

24           that we don't even have a model to get.


 1                  What do you think?

 2                  MR. GUSDORF:  So I'm happy to speak to 

 3           this.  And I would say it's a hearty yes and 

 4           a hearty no.  

 5                  The most famous tax policy adage is 

 6           "An old tax is a good tax."  The idea being 

 7           kind of build -- taxes are very hard to 

 8           administer and they're very complex, so build 

 9           within the system you have that you know 

10           works.

11                  And we do still have really strong 

12           receipts from our personal income tax.  And 

13           we currently have very strong business tax 

14           receipts.  But I think you've identified a 

15           lot of major issues that can be addressed 

16           within those frameworks.  

17                  So one big issue that's in the news a 

18           lot:  Billionaires pay very little income tax 

19           because they don't realize their gains and 

20           they use a lot of debt to finance their 

21           lifestyle.  You could use a mark-to-market 

22           mechanism to -- like this is the Biden 

23           minimum income tax for billionaires proposal.  

24                  Uber, it's really an employment law 


 1           issue.  

 2                  There's another one I that wanted to 

 3           bring up that I've forgotten about --

 4                  MS. EISNER:  Multinational?  

 5                  CHAIRWOMAN KRUEGER:  You sign up for 

 6           anything, they sell your data --

 7                  MR. GUSDORF:  Oh, pass-throughs.  One 

 8           of the biggest trends in taxation is the 

 9           shift to the use of pass-through entities.  

10                  So we should really be looking at 

11           entity-level taxes for pass-through 

12           businesses.

13                  CHAIRWOMAN KRUEGER:  Thank you.  Thank 

14           you.

15                  CHAIRWOMAN WEINSTEIN:  Thank you.  

16           There are no further questions.  Thank you 

17           all for being mere.  

18                  And this is going to conclude our 

19           fifth hearing, budget hearing, the Taxes 

20           hearing.  

21                  The next joint committees will convene 

22           on Monday for the Human Services budget 

23           hearing, starting at 11:30 a.m.

24                  CHAIRWOMAN KRUEGER:  Thank you, 


 1           everyone.

 2                  MR. GUSDORF:  Thank you.

 3                  MS. EISNER:  Thank you.

 4                  MR. KHAN:  Thanks.

 5                  (Whereupon, at 5:13 p.m., the budget 

 6           hearing concluded.)