BILL NUMBER:S4500A             REVISED 1/24/14

TITLE OF BILL:  An act to repeal certain provisions of the tax law
relating to the minimum wage reimbursement credit

PURPOSE:  To repeal the minimum wage reimbursement credit.

SUMMARY OF PROVISIONS:

Sections 1 through 7 of the bill repeal and amend those sections of
law which relate to the minimum wage reimbursement tax credit.

Section 8 establishes the effective date.

JUSTIFICATION:  The 2013 New York State Budget raised New York's
minimum wage through a three-year phase-in that will reach $9.00 in
2016. While there are many who believe that this increase did not go
far enough, fast enough and that it should have included indexing that
would cause the wage to automatically rise along with inflation or the
cost of living, any increase in the minimum wage goes a long way to
helping thousands of hard-working New Yorkers who are struggling just
to make ends meet. However, the minimum wage agreement also included
what amounts to a poison pill, in the form of an uncapped,
taxpayer-subsidized credit that perversely incentives businesses,
including mega-corporations, to replace adult workers with teenagers
and keep wages as low as possible.
              

Simply put, this tax credit is an ill-conceived, counterproductive
piece of policy and a waste of precious resources. While there is no
cap on the amount of the credit that can be allocated, it is
conservatively expected to cost the state between $20 and $40 million
per year. The ostensible goal of improving the employment prospects of
young people could be vastly better served by any number of
initiatives that would not carry the same disastrous incentives such
as more than doubling funding for the Summer Youth Employment Program.

There is also essentially no protection for fired workers. While
firing someone solely to get this tax credit is technically against
the law, technically only matters if the person who gets fired: knows
about the tax break, knows about the law, knows that she got fired so
she could be replaced by an eligible teenager, can prove that her
employer's desire to access the credit is the only reason she was
fired, and has time to wait for her case to be resolved within an
overburdened, underfunded system.

This tax credit has been roundly criticized not only by workers'
rights advocates and other voices from the left, but by staunchly
business-friendly outfits from the Wall Street Journal to Crain's New
York Business to the Empire Center for New York State Policy. No less
than Greg David of Crain's described the specifics of the tax break as
follows:

"The state will subsidize the entire increase in the minimum wage for
workers between 16 and 19 in the first year and up to 75% in the third
year, when the wage is increased to $9 an hour. So firing someone 20
and over and replacing them with someone the right age offers
employers a bonus of $1,560 to $2,808. Only people making exactly the


minimum wage qualify for the credit, so there is a strong incentive
not to pay any more. Oh, and the credit is available to all companies.
McDonald's franchises upstate will get a lot of benefits; those in the
city who routinely pay more than the minimum wage now have an
incentive to lower wages."

This is a bad and destructive piece of policy and a waste of taxpayer
dollars. It is in the best interest of workers, responsible
businesses, and the State as a whole that this tax credit be repealed
immediately.

LEGISLATIVE HISTORY: This is a new bill

FISCAL IMPLICATIONS: Significant savings to the state.

EFFECTIVE DATE:  This act shall take effect immediately and shall be
deemed to have been in full force and effect on and after January 1,
2014.