BILL NUMBER: S1622
SPONSOR: JACKSON
 
TITLE OF BILL:
An act to amend the tax law, in relation to extending the top state
income tax rate; and to repeal certain provisions of such law related
thereto
 
PURPOSE:
The purpose of this legislation is to increase state tax revenues and
reduce economic inequality by creating a fair and progressive personal
income tax.
 
SUMMARY OF PROVISIONS:
Sections 1, 2, 3, 4, 5, and 6 amend Section 601 of the Tax law to
provide comprehensive progressive income tax reform. For married couples
filing jointly, the following tax rates and brackets are imposed: 7.5%
for incomes over $500,000; 8.0% for incomes over $700,000; 9.0% for
incomes over $900,000; 10.0% for incomes over $1,000,000; 12.0% for
incomes over $2,000,000; 14% for incomes over $3,000,000; 16% for
incomes over $4,000,000; 18% for incomes over $5,000,000; 20% for
incomes over $10,000,000; 22% for incomes over $15,000,000; and 24% for
incomes over $20,000,000. The new rates and brackets for heads of house-
hold conform to these new rates and brackets for married taxpayers
filing jointly.
For single filers, the following tax rates and brackets are imposed:
7.5% for incomes over $450,000; 8.0% for incomes over $600,000; 8.5% for
incomes over $700,000; 9.0% for incomes over $800,000; 10% for incomes
over $900,000; 11% for incomes over $1,000,000; 12% for incomes over
$2,000,000; 14% for incomes over $3,000,000; 16% for incomes over
$4,000,000; 18% for incomes over $5,000,000; 20% for incomes over
$10,000,000; 22% for incomes over $15,000,000; and 24% for incomes over
$20,000,000.
Section 7 repeals subsection (d-4) of Section 601 of the Tax Law.
Section 8 is the effective date.
 
JUSTIFICATION:
New York is an exceptionally wealthy state. Treated as a separate coun-
try, it would have one of the world's largest economies. With such a
strong economy, all New Yorkers should have fundamental economic rights:
access to high-quality education, affordable healthcare, guaranteed
housing, and basic social services and social insurance. New York must
also finance investments in green energy, green jobs, and green infras-
tructure to mitigate the catastrophic risks of climate change.
Unfortunately, New York is also the most unequal state in the nation.
This is due in part because the tax system has not kept pace with chang-
es in the economy, leaving the many high-earning professionals and weal-
thy families in this state undertaxed. Economic growth from recent
decades has overwhelmingly benefited a small segment of elites, while
inflation-adjusted wages have stagnated for the vast majority of working
people since the 1970s. The state government, lacking adequate tax
revenues, has been unable to afford essential public investment and
social spending, including upgrading our infrastructure, repairing
public housing, sufficiently funding public education, and financing
Medicaid. Too many years of allowing the wealthiest residents not to pay
their fair share in taxes has thrown our state budget into a massive
hole. The COVID-19 pandemic, which exacerbated existing budgetary chal-
lenges, has shown just how urgently these reforms are needed.
Our state is in dire need of tax reform. The rich benefit from New
York's workers, infrastructure, and communities, and have historically
failed to reinvest in our state. To remedy the state's budgetary prob-
lems and fairly distribute the tax burden, the personal income tax must
be transformed into a meaningfully progressive tax.
Personal income tax is the state's largest source of revenue, but it is
not a fair tax. The income tax rate is approximately a flat 6.5% for all
taxpayers making less than $1 million per year, leaving Wall Street
bankers bearing the same tax burden as working-class families. While it
is widely observed that the rich pay a majority of the state's tax
revenues, this is only because there are so many extraordinarily rich
people in New York. Less discussed is that a flat tax rate is regres-
sive: it places a disproportionate burden on the working class and
middle class. When combined with the sales tax, an even more regressive
tax that hits working people hardest, it makes for a state tax system
that raises inadequate revenue, burdens working people and communities
of color, exacerbates the racial wealth gap, and leaves the wealthy and
the economic elite paying less than their fair share.
This bill reforms the personal income tax to make it a progressive tax.
New rates are added for single taxpayers earning more than $450,000 per
year, and married taxpayers earning more than $500,000. The tax
increases for these brackets are just .065%. Additional brackets are
added in roughly $100,000 increments, with 0.5% tax increases per brack-
et, such that the tax rate rises to 11% for an individual making $1
million per year or a married couple making $2 million per year at 12%.
The rates continue to rise, reaching 24% for an individual or married
couple making $20 million per year. These changes do not burden the
middle class. U.S. Census data shows the median household income in New
York for 2021 to be approximately $75,00, which is far below the range
in which these tax increases take effect. Moreover, even those taxpayers
making $500,000 per year will only see a small increase in their tax
rate.
These reforms do not just make the personal income tax fair. They
dramatically increase its revenue raising power. A properly funded state
government can protect the livelihoods of public sector workers, invest
in infrastructure, and secure quality education, housing, and healthcare
for all.
 
LEGISLATIVE HISTORY:
2023-2024: S.2059 - REFERRED TO BUDGET AND REVENUE/ A.3115 - referred to
ways and means
2021-2022: S.2622 - Budget and Revenue/A.4604 - Referred to Ways and
Means
 
STATE AND LOCAL FISCAL IMPLICATIONS:
To be determined.
 
EFFECTIVE DATE:
This act shall take effect immediately.

Statutes affected:
S1622: 601 tax law, 601(d-4) tax law