TAXED TO DEATH
State’s plan to wallop high earners will kill NYC
New Yorkers face a new plague: a proposal by Democratic state lawmakers to hike income, estate and corporate levies by $7 billion to finance their record $208 billion tax-and-spend scheme. Critics and even moderate Dems say the wild spree isn’t needed because the feds are giving a $100 billion COVID-relief bailout to the Empire State, and will only drive more deeppocketed New Yorkers to flee.
New York, still reeling from a once-in-acentury pandemic, now faces a plague of tax increases to fuel a massive 23 percent surge in state spending proposed by Albany Democrats.
The $7 billion in tax increases recommended by both the Dem-controlled Assembly and Senate includes higher levies on wealthy New Yorkers, estates and corporations — putting a big “We Don’t Want You Here” sign on the Empire State.
Many top corporations are already eyeing the exits, business advocates said.
The brazen tax-and-spend-apalooza comes as a weakened three-term Gov. Cuomo fights for his political life, mired in the COVID-19 nursing-home scandal and sex-harassment allegations.
The taxes would prop up a record-shattering $208 billion in spending — matching the combined state budgets of Texas and Florida, both of which have a larger population than New York, and nearly equaling the proposed $227 billion budget of California, a state with double the Empire State’s population. The state’s ballooning fiscal blueprint — it has increased by more than 600 percent since 1984 — eclipses the budgets of many countries, including Portugal, Turkey, Norway, Denmark and Indonesia.
Shockingly, the huge proposed hikes are not nearly high enough for the most liberal lawmakers in the state.
A draft letter being circulated among left-wing Democrats to send to Assembly Speaker Carl Heastie calls for doubling the $7 billion tax plan to $14 billion.
“Our one-house resolution must represent a floor and not a ceiling, and have identified a number of urgent, unmet needs in the resolution that require raising at least $7 billion more in state revenue,” the memo obtained by The Post says.
Any hikes, if implemented, would further pad New York’s already top-in-the-nation state and local tax burden — 14 percent of an average New Yorker’s income — according to the Tax Foundation research group. The major tax hikes include:
Raising the rate on millionaires (singles making more than $1 million and couples earning more than $2 million) from 8.82 to 9.85 percent, with the rate gradually topping out at 11.85 percent for those in the $25 million to $50 million bracket.
A new capital-gains tax of 1 percent on those earning more than $1 million a year; a tax on second homes in New York City; an estate tax of 20 percent (up from 16.5 percent).
Corporate franchises, utilities and insurance companies would be hit with an 18 percent “surcharge” — which could be passed off to customers in higher bills.
The state Senate and Assembly have their own proposals, which are similar but not identical. The record spending includes:
A $5.7 billion one-year increase in education aid via the state Senate. That includes $1 million for implicit-bias training of teachers and $300,000 for racially and culturally inclusive curriculum.
$2.1 billion “Excluded Worker Fund” that would provide unemployment insurance benefits to illegal residents and other noncitizens ineligible under federal programs. Undocumented immigrants would be also be eligible for medical coverage.
$1 billion for small businesses, $400 million in additional rental assistance and $200 million to help boost staffing in nursing homes ravaged by the coronavirus.
There is also tens of billion of dollars for lawmakers’ pet projects restored or added to the budget. The pork includes: $10 million for county fairs; $15 million for the Council on the Arts; $350,000 for hops and barley research at Cornell; $75,000 to the Maple Growers Association; and $50 million for zoos, botanical gardens and aquariums.
And while big corporations and rich New Yorkers get targeted, one industry gets taken care of: Hollywood. The tax credit for movie companies shooting in New York is extended through 2026.
The tax hikes on wealthy residents are problematic because they already pay most of the freight and have the means to leave, critics said. New York’s top 1 percent generates 44 percent of income tax revenues. The tax plan could trigger an exodus of wealthy, retirement-eligible taxpayers.
“It’s a hell of a lot cheaper to live and die elsewhere,” said Ken Pokalsky, vice president of the NYS Business Council.
New York’s well-to-do already got whacked with thousands of dollars in tax hikes after former President Donald Trump and a GOP-led Congress imposed a $10,000 cap on write-offs of their high state and local taxes on federal tax returns.
Meanwhile, Washington is aiming another financial double tap: President Biden says he wants to hike income taxes on joint filers making more than $400,000 annually, from 37 percent to 39.6 percent.
Combining the federal, state and city income levies, Gothamites making more than $1 million would hand over more than half their pay to the taxman.
Critics complain that Albany Democrats are pushing the tax hikes for ideological — not financial — reasons, to placate a growing left wing obsessed with taxing the rich to increase spending on social programs.
A spokesman for US Senate Majority Leader Chuck Schumer (D-NY) said the $12.6 billion the feds have dedicated to Albany’s coffers in the $1.9 trillion federal COVID-19 stimulus package wiped out any projected state deficit. Essentially, he suggested, Albany doesn’t have to raise an extra dime to pay its bills.
Yet right now the three Democratic leaders of state government — Gov. Cuomo, Senate Majority Leader Andrea StewartCousins and Assembly Speaker Carl Heastie — are negotiating a final fiscal blueprint from two enormously-expanded budget proposals: the Legislature’s $208 billion plan and Cuomo’s $193 billion scheme. The final budget must be enacted by April 1.
Watchdogs agree that tax hikes are unnecessary — and could be counterproductive.
“The reality is that given the money that’s come in, the increases aren’t necessary,” said Andrew Rein, executive director of the Citizens Budget Commission.
Already 20 top finance, private-equity and tech firms are considering fleeing to Florida, said Kathryn Wylde, CEO of the New York City Partnership.
“Any conversations that have gone on are based on ideology and the moral issue around income inequality. But raising taxes won’t fix that,” Wylde said.
“The conversation has to be, ‘How do we replace 1 million jobs that have left New York state?’
“Instead we are saying: Punish the rich.”
PROPOSED STATE LEVIES:
Millionaire income-tax hike: rate for single filers making more than $1 million and couples earning more than $2 million would start at 8.82 percent and go to 11.85 percent for those in $25-$50 million bracket.
New income-tax bracket for taxpayers earning $5$25 million and one for those making more than $25 million.
New capital-gains tax of 1 percent on those earning more than $1 million a year.
New progressive state tax on pied-à-terres, mansion town homes — or anything in between — used as a second home in NYC.
Estate tax would rise from 16 percent to 20 percent.
An 18 percent “surcharge” on corporate franchises, utilities and insurance companies — and higher bills for customers.
Reinstatement of a minimum business tax on corporate capital.
A recording tax on “mezzanine debt and preferred equity investments.”
AND BIG-TICKET SPENDING ITEMS
$50 million capital improvement fund for zoos
$3 billion to help improve water quality
$200 million to nursing homes to improve staffing ratios
$100 million Extreme Winter Recovery Program
$624 million to raise wages for the lowest-paid home health workers