NEW YORK NOW – Democrats who control the state Legislature in New York took another step toward raising tax rates for wealthy New Yorkers Monday, with each chamber presenting its own proposal for this year’s state budget — valued at more than $192 billion.
Gov. Andrew Cuomo, meanwhile, appeared to suggest at a public appearance Monday that Democrats should tread carefully with new taxes on the rich, fearing they could backfire.
“How you raise revenue can actually raise revenue, or can cost you revenue,” Cuomo said. “If you’re not careful the way you do it, you may actually lose money for the state because businesses and residents will make changes.”
The topic has been a point of contention between Democrats in the Legislature and Cuomo, who’s historically been reluctant to raise taxes on the wealthiest New Yorkers.
Cuomo has warned that higher taxes could drive the rich out of New York, and take their tax revenue with them. The top 1% of earners in New York generates nearly half of the state’s revenue from income taxes, according to state data.
Assembly Speaker Carl Heastie, D-Bronx, said Monday that there were a few differences between their proposal to raise taxes on the rich and what the Senate wants to do, but that they were on the same page.
“There’s slight differences in our proposals, so I’d say we’re in the same neighborhood, but maybe not in the same zip code on certain things,” Heastie said. “I think overall, the Senate and the Assembly are in a pretty similar place.”
Both proposals would raise tax rates for single filers making more than about $1 million annually, and create two new tax brackets for those who earn more than $5 million.
Income tax rates for those making more than about $1 million, and couples making more than about $2 million, would increase from 8.82% — the state’s current top rate — to 9.85% under both plans.
Those making between $5 million and $25 million annually would see their income tax rate rise to 10.85%, while those making more than $25 million each year would see their income taxed at 11.85%.
Income tax rates would not increase for anyone making less than about $1 million each year under either plan.
Democrats also want to install a surcharge on capital gains for taxpayers who earn more than $1 million each year, and approve other measures targeted at high-income earners. Those proposals would generate between $7 billion and $8.2 billion, according to the plans.
Republicans were critical of the proposals Monday, saying New York didn’t need to raise billions of dollars in new revenue because the state government is expected to receive $12.5 billion in direct aid from the latest stimulus bill approved by Congress.
Sen. Tom O’Mara, the top-ranking Republican on the Senate Finance Committee, which negotiates the budget, said Democrats should be more focused on tax relief and spending cuts.
“Among other priorities, we should reject tax hikes, focus on badly needed tax relief, and make critical investments in local infrastructure that will strengthen local communities, economies, environments and governments,” O’Mara said.
“Equally important, we need to recognize the fiscal challenges New York will face for the foreseeable future, steer clear of any massive new taxing and spending, and bolster the state’s emergency reserve funds.”
The state budget is due at the end of March, leaving lawmakers less than three weeks to come to a final deal on the spending plan with Cuomo’s office.