BILL NUMBER: S10532
SPONSOR: HINCHEY
 
TITLE OF BILL:
An act to amend the tax law, in relation to establishing a property tax
offset in Ulster county
 
PURPOSE:
The purpose of this bill, the Ulster County for Fair Taxes Act, is to
make taxation in Ulster County more fair by authorizing the County, upon
adoption of a conforming local law, to establish a property tax offset
through a state-administered resident income tax surcharge on high-in-
come residents.
Ulster County currently relies on property taxes and sales taxes to fund
essential county operations and services. Those revenue sources place a
greater relative burden on tow-, moderate-, and middle-income residents
than on high-income residents. This bill provides Ulster County with a
more progressive local revenue option, modeled on the state administered
local income tax surcharge structure used for the City of Yonkers, so
that the County may reduce overreliance on regressive property and sales
taxes and better align local revenue obligations with ability to pay.
 
SUMMARY OF PROVISIONS:
Section 1 amends the tax law by adding a new Article 30-C, known as the
Ulster County for Fair Taxes Act, to authorize Ulster County to estab-
lish a property tax offset by means of a state-administered resident
income tax surcharge.
New section 1360 defines terms used in the article, including "county,"
"surcharge," "net state tax," "benchmark state tax," "excess state tax,"
and "applicable threshold amount."
New section 1361 authorizes Ulster County, acting through its county
legislature, to adopt, amend, and repeat local taws imposing the
surcharge. The surcharge may not be imposed unless the County adopts a
conforming local law. The surcharge is imposed at a fixed rate of
sixteen and seventy-five hundredths percent of excess state tax. For
individuals, the surcharge applies only to state income tax assessed on
income above $200,000 for an individual not filing a joint return and
above $400,000 for individuals filing a joint return. The section
prohibits local variations from the tax base, rate, thresholds, persons
subject to the surcharge, withholding requirements, administrative
provisions, and taxpayer remedies established by state law. It also
provides that the surcharge shalt not reduce state tax liability, shall
apply prospectively only, and shall not authorize a nonresident income
tax.
New sections 1362 through 1368 establish rules for persons subject to
the surcharge, computation of excess state tax, county residency,
returns and liabilities, changes in county resident status, estates and
trusts, partnerships, limited liability companies, corporations, and
exempt entities. These provisions generally conform the surcharge to the
state personal income tax framework under Article 22 of the Tax Law.
New section 1369 provides for withholding from wages paid to county
resident employees and authorizes the commissioner of taxation and
finance to prescribe withholding tables, forms, residence certificates,
and related instructions.
New section 1370 provides for credits, refunds, estimated surcharge
payments, and first-year relief from additions to tax for underpayment
of estimated surcharge where the underpayment is attributable to initial
adoption and the taxpayer acted in good faith.
New section 1371 provides that the surcharge shall be administered,
enforced, collected, and reviewed by the commissioner of taxation and
finance in the same manner as taxes imposed under Article 22 of the Tax
Law.
New section 1372 establishes requirements for local law adoption,
filing, effective date, amendment, repeal, expiration, and termination.
A local law adopted pursuant to the article may take effect only on the
first day of January of a taxable year and applies only to taxable years
beginning on or after such date.
New section 1373 provides for deposit and disposition of surcharge
revenues. Revenues collected by the commissioner are deposited in trust
for Ulster County, with amounts retained as necessary for refunds, cred-
its, offsets, and reasonable administrative costs. Remaining revenues
are remitted monthly to the chief fiscal officer of Ulster County and
paid into the county treasury for county purposes as provided by local
law.
New sections 1374 through 1376 authorize regulations, forms,
instructions, and guidance; provide severability; and provide that the
authority granted by the article continues until repealed by act of the
Legislature, while allowing Ulster County to include a sunset or termi-
nation provision in a local law.
Section 2 provides that the act shall take effect immediately, provided
that no surcharge may be imposed unless and until Ulster County adopts a
local law satisfying the requirements of Article 30-C of the Tax Law.
 
JUSTIFICATION:
Ulster County relies on property taxes and sales taxes to fund essential
county operations, public services, and local needs. While those revenue
sources are important under current law, they are also regressive. Sales
taxes take a larger relative share of income from working families and
lower-income residents than from high-income residents. Property taxes
also place significant pressure on homeowners, renters, seniors, and
middle-income households, who already face rising housing costs and
affordability challenges. In Ulster County, 41% of renters and homeown-
ers are considered severely cost-burdened when it comes to housing,
spending half their income to keep a roof over their heads. About one-
third of working households in Ulster County cannot make ends meet,
according to the most recent ALICE data from United Way.
Persistent income inequality in Ulster County and in New York State
remains a serious public concern, made worse by an inequitable tax
burden in which mandated local shares of Medicaid and other social safe-
ty net programs must be paid with revenue from property and sales taxes
rather than from income taxes.
The Ulster County for Fair Taxes Act provides an option for the County
to modestly reduce this inequitable burden within the limits of the
County government's authority. The bill. does not automatically impose a
new tax. Instead, it authorizes Ulster County, through local law, to
adopt a resident income tax surcharge on high-income residents. The
surcharge is narrowly structured. For individuals, it applies only to
state income tax attributable to income above $200,000 for non-joint
filers and $400,000 for joint filers. The bill does not authorize a
nonresident income tax, does not permit retroactive application, and
does not allow Ulster County to create separate local deductions,
exemptions, credits, rates, thresholds, or taxpayer remedies.
The bill is modeled on the state-administered local income tax surcharge
approach used for City of Yonkers. By integrating the surcharge into the
Article 22 personal income tax framework, the bill avoids creating a
separate county income tax bureaucracy. The Department of Taxation and
Finance would administer the surcharge through existing state income tax
systems, including filing, withholding, estimated payments, refunds,
enforcement, confidentiality, and taxpayer review procedures.
The bill also preserves local control. Ulster County must affirmatively
adopt a conforming local law before any surcharge can be imposed. Reven-
ues collected are remitted to Ulster County and used for county purposes
as provided by local law. This gives the County a practical tool to
reduce pressure on property taxes and sales taxes while funding essen-
tial services in a way that is more closely aligned with residents'
ability to pay.
By authorizing a progressive, income-based local revenue option, this
bill advances tax fairness, supports local fiscal stability, and gives
Ulster County a responsible pathway to reduce reliance on regressive
taxation.
 
PRIOR LEGISLATIVE HISTORY:
New bill.
 
FISCAL IMPLICATIONS:
To be determined. This bill authorizes, but does not itself impose, a
resident income tax surcharge in Ulster County. No surcharge revenue
would be generated unless and until Ulster County adopts a conforming
local law pursuant to Article 30-C of the Tax Law. County revenues and
state administrative costs would depend on local adoption, implementa-
tion, and the amount of surcharge liability collected. The bill author-
izes reasonable administrative costs to be reserved from surcharge
collections before revenues are remitted to Ulster County.
 
FISCAL IMPACT ON LOCALITIES:
To be determined. The bill would provide Ulster County with authority to
adopt a new progressive local revenue source by local law. Any local
fiscal impact would depend on whether Ulster County adopts such a local
law, the taxable years for which the surcharge applies, the amount of
surcharge revenue collected, and how the County uses such revenues for
county purposes as provided by local law.
 
EFFECTIVE DATE:
This act shall take effect immediately; provided, however, that no
surcharge shall be imposed pursuant to Article 30-C of the Tax Law
unless and until Ulster County has adopted a local law satisfying the
requirements of such article.