New York State, facing economic difficulty from a shrinking workforce and coronavirus pandemic lockdowns, is nearing a deal to raise taxes on those earning over $1 million, which would make it the highest combined local tax rate in the U.S.
Gov. Andrew Cuomo has resisted the move for years, but circumstances are now different and he is nearing a budget agreement with New York legislators, The New York Times reported.
“We have a conceptual agreement on all issues, I think it is fair to say,” Cuomo told reporters on a conference call, according to the Times. “We’re dotting some i’s, we’re crossing some t’s.”
Cuomo, like many fiscal conservative Republicans, has believed higher taxes would drive away businesses and wealthy taxpayers, hurting the state’s bottom line.
The Times noted a progressive legislature makeup and Cuomo’s declining leverage amid investigations into his nursing home data and sexual misconduct allegations have combined to create “sudden momentum” for the wealth tax increases.
The budget raises income and corporate taxes and potentially legalizes mobile sports betting, the latter of which would produce $500 million in new tax revenue.
The top earners in New York City would pay between 13.5% to 14.8% in state and city taxes, when combined with New York City’s top tax rate of 3.88%. The highest top tax rate in the nation is California at 13.3%, according to the Times.
The increased rates would technically be temporary and due to expire by the end of 2027.
The proposal “sends taxes and spending skyrocketing to completely unsustainable levels,” Republican State Senate Minority Leader Rob Ortt told the Times.
“Instead of working on our economic recovery and giving people a reason to remain here in the Empire State, one-party rule in Albany is focused on driving more families, seniors, young New Yorkers and opportunities away from our state,” Ortt added.
Two new personal income brackets would be created, including those making between $5 million and $25 million taxed at 10.3%, and those over $25 million at 10.9%. Also, those making over $1 million would see their rate increase from 8.82% to 9.65%, the Times reported from documents it obtained.
The top 2% of New York’s highest earners already pay roughly half of the state’s income taxes, the Times reported.
“Thanks to thousands of New Yorkers who took to the streets and the ballot box, tireless advocates and grass-roots organizers, and the new Democratic legislative power in Albany, we are beginning to transform New York from a state that protects the wealthy to a state that delivers for the many,” Invest In Our New York Coalition campaign manager Rebecca Bailin told the Times.
Source: Newmax
