Assembly Speaker Heastie touts plan to add $4.3 billion in taxes to richest New Yorkers
(The Center Square) – New York just got billions from the federal government last week, and now state lawmakers are looking for more.
In a statement released Sunday, New York Assembly Speaker Carl Heastie, D-Bronx, and Ways and Means Committee Chair Helene Weinstein, D-Brooklyn, announced their chamber’s plan calls for spending $208.3 billion, an increase of $16.9 billion from last year’s budget. It’s also $12.2 billion more than Gov. Andrew Cuomo presented.
Both the state Assembly and Senate released their updated budget proposals over the weekend for the 2021-22 fiscal year. Leaders in the chambers now have a little more than two weeks to bridge the differences in the bill before the new year starts on April 1.
Heastie said the upcoming spending plan “must meet the moment” for a state coming out of a health emergency that has crippled sectors of the economy. To help, the recently passed American Rescue Plan will provide about $12.5 billion in direct aid to the state and billions more to county and local governments.
“We are receiving significant federal funding, but we must also ask those who can do more to step up and help. The COVID-19 pandemic impacted every aspect of our lives, and we need to make investments that will aid in our state’s recovery, while ensuring that New Yorkers continue to have access to the vital services they need.”
Even with that aid, the Assembly includes a series of tax increases for additional revenue.
That includes a significant hike in the top income tax rate for individuals earning $1 million or more and couples earning $2 million or more. The budget calls for the rate to go from 8.82 percent to 9.85 percent, a rate increase of 11.7 percent. It also would create new brackets for people making more than $5 million (10.85 percent) and $25 million (11.85 percent).
Lawmakers expect that tax increase alone to create $4.3 billion in new revenue.
In addition, the Assembly also seeks a new 1 percent tax on capital gains for those who make $1 million or more. That would create an estimated $700 million. Owners of “high value second homes” in New York City would also find themselves subject to a “progressive state tax” set to bring in another $300 million.
In a blog post Monday, Empire Center Founder and Senior Fellow E.J. McMahon notes the state’s top 1 percent of earners already account for 44 percent of all income tax paid in the state. He said even if embattled Gov. Andrew Cuomo can persuade lawmakers to do away with the tax hikes, it might be too late.
“Even if Cuomo can make a veto (or veto threat) stick, and if the final budget deal doesn’t include this whopper of a soak-the-rich tax hike, many in the targeted class of high earners could see it as a harbinger of things to come,” McMahon wrote. “In that case, more of them are likely to react by reconsidering their presence in New York.”
Cuomo has line-item veto authority, but his fellow Democrats, who have soured on the governor in recent weeks, may have enough votes to override those vetoes if nearly all members agree on the increases.
However, he also called on the federal government to give the state $15 billion in direct aid. He told reporters last week that he would not consider tax hikes off the table after the Rescue Plan only set aside less than that.
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