INDEPENDENT BUDGET OFFICE
The City of New York
110 WILLIAM STREET, 14TH FL., NEW YORK, NY 10038
|For Immediate Release
Monday, May 24, 1999
|Contact: Herbert Block
* NEWS RELEASE *
IBO REPORT COMPARES COUNCIL AND MAYORAL
PROPOSALS TO REDUCE CITY TAXES ON POOREST
Tax Relief for the Working Poor, a report released today by the Independent Budget Office (IBO), compares proposals to ease the tax burden on poor working families. Many such families pay city income taxes even though their income is too low for them to pay state or federal taxes-a projected 127,000 households in 1999 and 110,000 in 2001. In response to this problem, both the Administration and the City Council have recently proposed creating a refundable earned income tax credit (EITC) for low-income city residents.
According to IBO, the Giuliani proposal would cost the city $40 million in fiscal year 2000, and would reduce the number of families paying city income taxes but no state or federal taxes to 59,000 by 2001. The Council's EITC proposal itself would cost $89 million in fiscal year 2000 and reduce the number of such families to 38,000 by 2001. The Council also has proposed a child care tax credit, costing $40 million annually. The combination of the two Council proposals would virtually eliminate city income tax liability for the remaining families.
Douglas A. Criscitello, IBO Director, said "Taxing the income of individuals struggling to escape poverty runs counter to efforts aimed at encouraging work over welfare. The pending proposals both have merit in that they would allow many of the working poor in New York City to keep more of their hard-earned money. Nevertheless, the lure of any tax cuts under consideration must be tempered by a realization that the city faces large projected budget deficits in the near future-recently made even worse by the repeal of the commuter income tax."
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