By: Ilana Siyance
New York lawmakers are moving towards a budget deal which will make the city’s
top earners pay the highest combined local tax rate in the United States.
As reported by the Wall Street Journal, on Saturday Democratic leaders of the state Assembly and Senate rolled out their plan which would increase corporate and income taxes by $4.3 billion annually. As part of Gov. Andrew Cuomo’s roughly $200 billion state budget, income-tax rates would swell from 8.82 percent to 9.65 percent for single filers reporting over $1 million in income, and joint filers reporting over $2 million. The proposed plan would also add two new tax brackets—in which income over $5 million would be taxed at 10.3 percent, and income over $25 million would be taxed at 10.9 percent, until 2027. If the legislation is passed, NYC’s top earners would have a combined state and city income tax of between 13.5% and 14.8%, beating California which currently has the highest top income-tax rate, at 13.3% on income over $1 million.
Tax increases would also be doled out to New York’s corporate franchises under the new budget. Corporate franchise tax would jump to 7.25% from 6.5% till 2023.
The budget bills should be finalized and voted on early this week, as per the WSJ. The added tax revenue would be utilized to increase school aid and add funds for undocumented immigrants, small businesses and tenants who are behind on their rent, as per the WSJ.
The pending budget is also likely to include an agreement on legalizing mobile sports betting in New York, as per a legislative official. Gov. Cuomo has said that could eventually bring in up to $500 million annually for the state. Such an initiative, along with the other programs, would bring an estimated total of $5 billion in new revenue for the state budget, the official told the WSJ.
The changes would mark the first time the income taxes were increased under the tenure of Gov. Cuomo, who has held the office since 2011. Business leaders have often cautioned lawmakers that increasing taxes for the upper class would lead the residents to flee the city which has already suffered an exodos due to the pandemic and remote work options. The departure of these high-rollers would leave the state in red, as the highest-earning 5 percent of tax filers bring in an estimated 60 percent of the total income taxes raised.