N.Y. SET TO RAISE TAXES ON PEOPLE EARNING OVER $1M
Budget agreement near to close state revenue shortfalls
Gov. Andrew Cuomo and New York state legislative leaders were nearing a budget agreement on Monday that would make New York City’s millionaires pay the highest personal income taxes in the nation, a stark result of the pandemic’s economic fallout.
For years, Cuomo resisted such a move, arguing that raising taxes, especially on the wealthy, would drive business out of state. But the coronavirus-related revenue shortfalls — combined with the growing strength of the Legislature’s progressive wing and the governor’s waning influence — created sudden momentum.
If enacted, the deal would raise income and corporate taxes to generate an extra $4.3 billion a year and would potentially legalize mobile sports betting to raise an additional $500 million in new tax revenue.
Under the proposed new tax rate, the city’s top earners could pay between 13.5 percent to 14.8 percent in state and city taxes, when combined with New York City’s top income tax rate of 3.88 percent — more than the top marginal income tax rate of 13.3 percent in California, currently the highest in the nation.
The question of who should pay to help revive the country, still recovering from the pandemic’s devastation of the economy, is percolating across the nation. In Washington, President Joe Biden has proposed 15
years of substantial increases in corporate taxes to help pay for an eight-year, $2 trillion package of infrastructure spending.
The president is also expected to propose tax increases on high-earning individuals, a maneuver that many states are also weighing. Lawmakers in California are considering a wealth tax, while Minnesota’s governor has proposed a new top income tax rate.
In New York, two new personal income tax brackets would be temporarily created: 10.3 percent for income between $5 million and $25 million, and 10.9 percent for income over $25 million, according to preliminary details obtained by The New York Times. The rates would expire by the end of 2027.
The personal income tax rate would increase to 9.65 percent from 8.82 percent for individuals making over $1 million and for joint filers making more than $2 million.
Raising taxes on the rich in New York has been a top policy priority of the Democratic Party’s left flank, but Cuomo, a third-term Democrat who is a fiscal centrist,
had long opposed the move. Now, the governor’s influence over the budget — as well as other matters in Albany — has seemed to weaken amid various investigations into sexual harassment allegations and his handling of virus-related deaths involving the state’s nursing homes.
Cuomo was in the awkward position of negotiating with Democratic leaders whose full support he has lost: Andrea Stewart-Cousins, the majority leader in the state Senate, has called on him to resign, while Carl E. Heastie, the speaker of the Assembly, has opened an impeachment investigation into the governor.
Democrats, who control the Legislature, entered this year’s negotiations emboldened by the governor’s apparent loss of power, eager to leverage the worst political crisis of Cuomo’s tenure to pass a bevy of progressive priorities. Democrats also have veto-proof supermajorities in both houses, increasing their clout.