NYC-WTC_000195490

NYC 9/11 Public Portal Document

but paid only 17,5 percent of total UNINCORPORATED BUSINESS TAX (TAX YEAR 1997) liability. Partnerships accounted for 22,3 Share of Filers and Share of Liability percent of all taxpayers and paid 82,5 JQQ___--------------------- -------------- ----------- ------------- percent of total liability. Because of the 87.8 tax credit and exemptions, 87.7 percent ■ Filers 8P ■ Uabilily

I 69,1 of filers iri 1997 were exempt from the tax. Proprietorships with net income 60 less than $25,000 (71.2 percent of all 40 filers) paid no unincorporated business tax. The additional exemption for each 20 partner creates higher thresholds for partnerships (16,5 percent of all filers in 0 I I 1997 were partnerships with no $0 $l-$10 $10-$20 $20-$ 100 Over $100 liability),' The service sector, made up ' Liability ($000s) i 6f the legal, accountirig and other Source; NYC Depdrttnent of Finance, Office of Tax Policy subsectors, accounted for 63.2 percent of , , total unincorporated business tax liability. Legal services and FIRE'comprised only 23 percent of taxpayers but incurred 60,8 percent of total liability. Forecast; Th? 2001 unincorporated business tax forecast has been decreased by $33 million to $776 million. This yields a decline in collections of 3,6 percent in 2001, The forecast for 2002 has been decreased by $10 million to $778 million, leaving growth at just 0,3 percent over the prior year' Uninco^orated business tax revenues in recent years have been particularly robust, with average annual growth from 1996 through 1998 reaching 21.2 percent. This unusually high rate of collections growth came in spite of substantial business tax cuts, which returned $50 million to unincorporated business taxpayers in 1998 alone, and stems from the unprecedented strength seen in New York Stock Exchange member-firm profits in recent years. Non-FIRE sector collections have also been robust over the same period due to the unprecedented growth in service sector employment since 1993. In 1999, unincorporated business tax revenues declined 2.2 percent reflecting international financial turmoil in the third quarter of calendar year 1998 which reduced FIRE sector collections. In 2000; unincorporated business tax revenues rebounded 22.6 percent reflecting the robust growth in New York Stock Exchange member-firm profits in tax year 1999 and substantial private sectior job gains in 2000, as well as the likelihood of overpayments which are expected to reduce cash payments in 2001. The/2001 unincorporated business tax forecast is decreased $33 million to $776 million, a decline of 3.6 percent from the prior year. Collections year-to-date through March are up 2.5 percent from the same period in 2000. The forecast decline for the year reflects the expectation that overpayments made in 2000 are reducing cash payments this year. In addition, the first and second installment payments on tax year 2001 to be made in April and June are expected to reflect the equity market correction and the weakened national economy. i For 2002, the forecast decline in New York Stock Exchange member-firm profits in calendar year 2001 pulls down FIRE sector liability in tax year 2001, suppressing FIRE payments in 2002, while the national economic slowdown restrains payment growth from the non-FIRE unincorporated business taxpayers. In 2003 through 2005 unincorporated business tax revenue is forecast to average 6.9 percent growth, as both New York Stock Exchange member-firm profits and the national economy rebound.

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NYC-WTC_000195565