Tax On Rich Contentious Part Of The New Budget
One of the chief arguments over the state budget will be whether to renew an income tax surcharge on New York’s wealthiest, known as the millionaire’s tax.
The state is facing a $3.5 billion deficit, and Governor Cuomo wants to add a billion dollars to the state’s public schools. He also wants to offer free tuition at public colleges for families making under $125,000 a year. He says continuing the tax surcharge is the simplest way to finance all that.
“Frankly we don’t have the resources to lose the millionaires’ revenue now,” Cuomo said.
But not all lawmakers agree. Senate Leader John Flanagan, a Republican, says he’s opposed.
“I like cutting taxes,” Flanagan said.
The so-called millionaire’s tax was enacted in 2010, during a state fiscal crunch, and it was supposed to be temporary, but has been renewed twice.
Assembly Speaker Carl Heastie wants to take the tax on the rich even further.
“We still feel we want to go beyond that,” Heastie said. “We still believe there’s some back money that should be put towards education.”
Heastie would like to see a decade old court order fulfilled. It says the state needs to spend billions of more dollars a year on public education. Governor Cuomo does not think the court order applies to the entire state, but his budget office points out that school aid has been increased by $6.1 billion over the past six years.
Currently the state’s top income tax bracket is for those making $1 million a year or more, and is set at 8.82 percent. It’s due to expire later this year, if Cuomo and lawmakers don’t agree to renew it. Speaker Heastie would like to see more tax brackets added, with a higher rate potentially for those making over $5 million a year, and even higher for those making $10 million a year, or more. He says if President Trump and Congress follow through with plans to cut taxes on the rich, then New York’s wealthy will have more left to pay higher state taxes.
“We want to add a couple more tiers,” Heastie said.
Governor Cuomo is not likely in favor of expanding the millionaire’s tax, but he says if it is not renewed, then lawmakers, and the state, will have to sacrifice some programs that they want, including a phase in of a middle class tax cut, agreed to last year.
“If they don’t agree to the millionaire’s tax extension, then you can’t do a billion dollars in education spending, you can’t do a middle class tax cut, you can’t do college affordability,” Cuomo said. “So that’s what they’re going to have to trade.”
In a sign that despite their differences, an agreement on the millionaire’s tax could come in the budget. GOP Senate Leader Flanagan refused to rule it out completely.
“I think it’s too early in the game for me to just say, ‘This is a deal breaker,’” Flanagan said.
The budget hearings begin on January 24, and the millionaire’s tax and other proposals will get some closer scrutiny.