NYC-WTC_000195490

NYC 9/11 Public Portal Document

|t F W'

considering the 35.2 percent growth posted the prior year. During the remaining quarter of the year, withholding is forecast to grow 15.9 percent on a common rate and base. Installment payments on liability year 2000 grew 17.8 percent on a common rate and base after growth of 27.1 percent in 1999. With nbnwage income growth in calendar year 2000 moderate (dividends, interest, and is rent increases 6.7 pprcent), and capital gains realizations expected to be sustained at the very high 1999 level, up an estimated 66 percent from the level of just two years prior, installment payment growth is likely being driven by taxpayers taking advantage of the safe harbor provision governing estimated payments.

i Settlement payments (final returns, extensions, State/City offsets, and refunds) on liability year 2000 are forecast to be $42 million lower than liability year 1999 on a common rate and base. The full-year impact of the STAR rate cut and, credit increase in tax year 2000 reduces the tax year 2000 settlement. However, the repeal of the nonresident earnings tax raises the settlement in tax year 2001, eliminating refunds normally paid out to nonresident filers., ’ For 2002, the personal income tax revenue forecast has been reduced $67 pillion to $4,766 million, a decline of 11.7 percent. This unprecedented reduction in revenue can be explained by both legislated reductions and economic weakness forecast for calendar year 2001. On the statutory side of the ledger, the forecast reflects the full-year impacts of the final STAR program tax cut (a reduction of $145 million from 2001), the annualization of the January 2001 reduction of the 14 percent surcharge ($91 million), and an increased TFA retention of $75 million. The weaker economy also reduces revenue. A reduction in Wall Street bonuses reduces wage income and cuts withholding by $85 million. A 28 percent reduction in capital gains realizations shrinks liability by an additional $281 million.

Withholding growth in 2002 declines 2.1 percent on a common rate and base, tracking the decline in the FIRE wage rate (10.7 percent) in 2002 and the reduction in the FIRE bonus payout ($11,4 billion) on calendar year 2001 profits. , Installment payments are forecast to decline 5.3 percent in 2002 on a common rate and base, reflecting a slowdown in nonwage income growth (dividends, interest and rent growth of 0.7 percent) and the decline in capital gains realizations for tax year 2001. The forecast slowdown in total liability is expected to decrease settlement payments by $24 million on a common rate and base in liability year 2001 over 2000. J ,

Personal incoihe tax revenue is forecast to average 7.2 percent growth from 2003 through 2005, as wage and nonwage income sources rebound with the national economy and capital gains realizations recover with stabilized equity markets. /

(I

54

NYC-WTC_000195551