(November 3, 2003) Albany, NY--New York State Governor George Pataki has vetoed legislation designed to attract film and television work to New York State. The bill, A.6883-A/S.3941, sponsored by Assemblyman Joseph Morelle (D-Irondequoit), unanimously passed both houses of the legislature in June of 2003. It sought to amend the tax law and the administrative code of New York City in relation to the imposition of personal income tax on the accrual of income, particularly income received by an individual through a partnership, S corporation, estate or trust, as a result of that individual's change of residency. The purpose of the bill was to encourage filmmakers, and other high-income individuals, to bring jobs to New York State without fear of being taxed by the state or city on their income earned outside of the state prior to their coming to New York.
"I am extremely disappointed that the Governor vetoed this bill," said Assemblyman Morelle, in a statement released shortly after veto. "According to a study released in 2000 by the Boston Consulting Group, the single most important factors in attracting feature film production to New York is the desire of the talent involved in the production to live and work in New York. By assuring individuals that their relocation to New York would not result in their income earned prior to becoming a resident from being taxed by the state and the city of New York, this bill would have provided a mechanism in combating runaway production and help attract film and television production back to New York State."
The effect of this legislation on the film industry is significant, since many individuals employed in the film industry work through their own personal service ("loan out") companies, which, today, are often S corporations or LLCs. In such circumstances, they receive their earnings through such entities rather than directly.
The Governor, in his veto message, acknowledged that the current policy of seeking to tax individuals on income that was earned outside of New York, prior to their becoming a resident of the state, has been an impediment to individuals seeking to relocate to the state. But he also stated that the bill would place an unnecessary burden on taxpayers and would result in disparate treatment of similarly situated taxpayers.
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