Fix to NY budget deficit is obvious and popular: Tax wealth
It is no secret that it’s become harder for working-class families to stay and live in New York. Political inaction to address the affordability crisis has resulted in skyrocketing housing and utility costs, astronomically expensive care for our children and elders, and has exposed people to deadly climate catastrophes.
The fixes to these critical issues require public funds — such as money to house people and invest in improvements to public housing buildings — that are constrained by diminishing revenue expectations. But, as we enter 2024 with a potential budget deficit and the end of federal COVID relief funds, our lawmakers are left with an age-old dilemma: find a new source of revenue or allow our public infrastructure to crumble, inadequately pay our childcare and elder care workers, and cut funding to other programs that help all New Yorkers thrive.
Lawmakers’ constituents have already made their choice. The vast majority of New Yorkers want the ultra-rich and large corporations to start paying their fair share of taxes. According to a December poll commissioned by the Invest in Our New York Campaign and conducted by Siena College Research Institute, 74% of
New Yorkers agree that New York should increase taxes on highly profitable corporations and the wealthiest New Yorkers to fund public programs and services. That sentiment remains popular across party lines and income levels across the state, including 58% of Republicans and 70% of individuals with a household income over $250,000.
Unfortunately, Gov. Kathy Hochul and much of the Legislature remain out of step with New Yorkers on this issue. The most coddled and protected constituency in the state of New York continues to be the extremely wealthy, who benefit from a rigged tax code, tax breaks, and incentives year after year.
Instead of cutting programs and services, the state could simply close tax loopholes that advantage the wealthy. For example, many ultra-rich New Yorkers make income by selling stocks and other investments — known as capital gains. But the federal government taxes this income much lower than the taxes taken out of our hard-earned paychecks.
Meanwhile, working-class communities — urban, rural and suburban alike — are scapegoated for struggling while enduring decades of financial uncertainty and insufficient government investment.
This year, Hochul is calling for spending freezes across the board and suggesting the state will cut essential services to newly arrived New Yorkers. But let’s address the obvious: in an economic environment where the cost of living for all New Yorkers continues to rise, flat spending really means cuts to programs and reduced services for regular New Yorkers. Yet, Hochul and her administration seem content to cut their way out of the deficit — leaving working-class families to fend for themselves — rather than consider any new measure that could generate billions of dollars in new annual public dollars from New York’s growing millionaire class.
Instead of cutting programs and services, the state could simply close tax loopholes that advantage the wealthy. For example, many ultra-rich New Yorkers make income by selling stocks and other investments — known as capital gains. But the federal government taxes this income much lower than the taxes taken out of our hard-earned paychecks. The Invest in Our New York Campaign’s capital gains tax proposal would make up the difference by adding a surcharge on income over $500,000 a year earned through capital gains. This way, the ultra-wealthy pay what they owe in taxes on income, no matter how they make it. When enacted, the proposal would raise $12 billion annually.
Beyond simply closing loopholes, we must also update our personal income tax and corporate tax system to help address New York’s long-standing economic inequality. And New Yorkers agree; 69% support modestly increasing state income taxes on the top 5% of earners, and 67% support increased taxes on corporate profits over $2.5 million.
Making New York’s ultra-rich pay what they owe in taxes isn’t just the right thing to do, it’s politically popular: Voters are more likely to favor a candidate who supports raising taxes on the wealthy to address the deficit, while just 27% favored candidates who support using budget cuts to control state spending.
It’s rare in politics to find a set of issues that unites such a broad range of people. But New York voters across all parties are demanding public funding for vital programs through tax increases on the ultra-wealthy rather than spending cuts that harm our communities. It is incumbent on Hochul and legislative leadership to answer that call.
Juanita Lewis is executive director of Community Voices Heard. Jasmine Gripper and Ana Maria Archilla are codirectors of the New York Working Families Party.