NYC-WTC_000195490

NYC 9/11 Public Portal Document

State made to the standard deductions. For tax years 1991 through 1994, changes to the State’s tax rate schedule, standard deductions and household credit were deferred. Consequently, the City retained the rate schedule in effect in 1990 for tax years 1991 through 1994.

Effective for tax years 1990, 1991, and 1992, the City imposed a temporary income tax surcharge on City residents. The top rate was increased to 3.91 percent from 3.4 percent. Single taxpayers with AGI below $15,000, manied taxpayers with AGI below $25,000, and heads of households with AGI below $16,500 were li not subject to the surcharge. In February of 1991, the “Safe Streets, Safe City” program was signed into law. Part of the program’s ftinding came from the extension of this surcharge for tax years 1993 through 1996. The surcharge subsequently was extended through tax year 1998, and ^as then allowed to expire.

Personal Income Tax Increases ; (SMillions) s I / ,/ ' 1997 1998 1999 // 2000 2001 2002

I Components of the 12.5 Percent Surcharge: Criminal Justice Account $ 90 $185 I General Fund 320 297 368 _ _ _ ’ I n ___ ___ ___ 12.5 Percent Surcharge Total $410 $482 $368' — — — 14 Percent Increase $486 $566 $585 $560 $552 $456 (I)' Reduced to lO.S percent on average, as ofJanaury l, 2001.

Beginning ip tax year 1991, the City imposed a three-year 14 percent income tax increase on City I residents, increasing the top rate from 3.91 percent to 4.46 percent through tax year 1998. Low income taxpayers were not exempt from the increase. The increase lias been extended four times, in 1993, 1995, 1997 and 1999. Legislation in 1999 extended the increase,through tax year 2001. i Federal tax law chaiiges, to which State law conformed, have also altered the City’s income tax. Effective for tax years beginning in 1991, taxpayers with AGI exceeding $100,000 were subjected to percentage reductions in their Federal itemized deductions. The $100,000 threshold is adjusted annually for inflation. i Regulations issued by the State provide that the Federal limitation also applies in calculating New York State t^able incomeki Another Federal law change, to which the State conformed, revised rules governing payment of estimated taxes by certain high-income filers. Beginning in tax year 1992, these taxpayers were no longer allowed the “safe harbor” of submitting the'same tax paid the previous year; estimated payments needed to equal at least 90 percent of their current year liability. This required taxpayers to calculate tax liability on a quarterly basis and “pay-as-you-go.” The Omnibus Budget Reconciliation Act of 1993 again revised Federal pies governing estimated tax payments and the State enacted conforming legislation for the State and City for tax year 1994. The new rules repealed the “pay-as-you-go” requirement and allowed all taxpayers with New j York adjusted gross income over $150,000 to pay estimated taxes based on either the safe harbor of 110 ptirefent of the previous year’s liability^ or 90 percent of current year liability. The legislation also reduced the period within which refunds must be made without payment of interest from 90 to 45 days after the due date for final returns. . \ , As part of New York State’s budget for fiscal year 1995-96, the State enacted an enhanced version of the 1987 tax cut which had been on hold since 1990. For tax years 1995 through 1^97, the State reduced its tax rates, increased standard deductions and the earned income credit, and reduced the number of tax brackets. The City rates effective for 1997 and 1998 reflected the City Tax Reduction Act of 1987, the 12.5 percent surcharge effective 1990 through 1998 and the 14 percent increase enacted in 1991.

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NYC-WTC_000195547