The millionaires of New York City will soon fall below the highest tax rate in the country.
Governor Andrew Cuomo and state legislators are getting closer to agreeing on a 2022 budget proposal that will create an extra $ 4.3 billion a year by raising revenue and corporate taxes, reports Luis Ferré-Sadurní and Jesse McKinley of The New York Times. The proposal requires that two new personal income tax brackets expire by the end of 2027, according to the exclusive details given to the Times.
Those who earn between $ 5 and $ 25 million are taxed on 10.3% of their income. It rises to 10.9% for those earning more than $ 25 million. And individuals who make more than $ 1 million and couples who bring in more than $ 2 million will raise their tax rates from 8.82% to 9.65%.
These tax rates particularly hit the highest earners in New York. The city already has a highest income tax rate of 3.88%. If the budget proposal is approved, they will eliminate between 13.5% and 14.8% in both state and city taxes, according to the Times. This is higher than the country’s current marginal income tax rate: 13.3% for top earners in California.
New York is dealing with economic pain
Cuomo said in January he plans to raise taxes if the White House does not help the state recover from its $ 15 billion deficit, reports Insider’s Grace Dean. This is the highest deficit in the history of New York, she writes. The state’s biggest deficit before that was $ 10 billion, which Cuomo said was “very difficult” to manage.
In a speech, Cuomo attributed New York’s deficit to the fact that the state has been “assaulted by the federal government” in recent years, as well as the cost of COVID-19, which increased the state’s revenue by 5.1 billion dollars.
As the hub of the U.S.’s first wave of COVID-19, New York City has struggled with the closure of small businesses and has seen many of the best-earning residents move to take advantage of taxes in other states. Urban expert Richard Florida told Insider the flight of the rich has caused a lot of financial pain for superstar cities like New York.
Cuomo called on the federal government to alleviate the New York emergency pandemic. He said that if Washington gave only $ 6 billion to the state, he would raise taxes to cover the difference.
“We have a plan in place, a force we have not had before and I believe our future is bright, but Washington must act fairly if we are to appear on the other side of the crisis,” he said. .
While Democrats were considering raising more than $ 7 billion in new revenue for the state, the Times reported, such discussions fell by the wayside when President Joe Biden’s $ 1.9 billion incentive package was approved, which is $ 12. , 9 billion in direct aid to the state of New York. It also included $ 5.6 billion for New York City, which, according to insider Juliana Kaplan, saved catastrophic city budget cuts.
Cuomo has been resisting taxation for years for fear it will drive businesses and the wealthy to other states. If all the richest New Yorkers flee the city, they could take more than $ 133 billion with them. That’s how much the top 1% of New Yorkers earned in 2018, a Bloomberg report found.
The Times attributes Cuomo’s change of mind to the economic downturn of the pandemic, a growing progressive influence in the legislature and the governor’s own ‘declining influence’.
The budget proposal must be finalized, as Biden is believed to be getting even more serious about taxing the rich. He said Americans earning more than $ 400,000 would see a “small to significant” tax increase, and that high-income Americans could increase their highest income tax rate to 39%.
If both Biden’s and Cuomo’s tax proposals are accepted, it means New York’s richest residents can pay more than half of their income in taxes.