Will the NYS high earner tax surcharge be continued? — Brooklynian

Will the NYS high earner tax surcharge be continued?

NYS presently has a progressive tax structure, wherein those who earn more pay a greater percentage of their income in taxes.

The human service agencies want it continued. The Occupy Wall Street people in the lower Manhattan might want it continued, but (as one might expect) it is unclear if they know such policies exist.

The governor is opposed to it, stating that it will cause wealthy individuals to leave the state.

Without action, the tax (funding stream) expires December 31, 2011. It is worth around $5B a year to the state.

Which side will win?

Comments

  • The governor is opposed to it, stating that it will cause wealthy individuals to leave the state.

    Why won't this myth just die.

    NJ raised taxes on the wealthy considerably and saw almost no flight.

    A soon-to-be published study out of Princeton and Stanford universities analyzes a similar income-tax increase in 2004, finding only a "negligible" rise in the number of millionaires who left New Jersey afterward. And according to the state Treasury, a 2009 tax hike prompted the rich to seek out more tax loopholes — upending the Legislature’s revenue estimates.
  • I predict the current tax will expire at the end of the year, and then a new one will be proposed by the legislature in the early 2012.

    We will have to really dislike the budget cuts from the expiration, to successfully get a replacement tax implemented.

  • Well, they've got to decide before Jan 15th because that's about the latest time the new tax tables can come out. There have been various and numerous surcharges on the income tax before. At one time everyone had to pay a surcharge although I don't remember the exact amount because it was back in the 80s when the city was more broke than it is now. I don't recall many people leaving because it's where they worked as well as lived.

  • The NYC commuter tax lasted a long time before it expired, and it arguably was pretty similar in that it made high earners pay a greater percentage of their income because they lived outside of the city and earned more money than most city residents.

    I forget what year it expired.

    Like the current struggle, those in favor of the commuter tax had demonstrations and rallies because they feared losing funding. Meanwhile, those who wanted the tax repealed (to expire), quietly lobbied in Albany and reminded candidates who paid for their campaigns.

  • This article points out that we already have a budget deficit, and that allowing this tax to expire may just make it worse.

    http://www.pressconnects.com/article/20111109/NEWS10/111080327/N-Y-financial-picture-remains-elusive?odyssey=tab|topnews|text|FRONTPAGE

  • Cuomo Could Trade Millionaire's Tax For Fiscal Reforms

    By Crain’s Health Pulse November 15, 2011

    The 2013 state budget deficit, estimated yesterday to be $3 billion to $3.5 billion, would have been larger but for reforms passed last year to cap education and Medicaid spending growth. Those changes offer a clue to how Gov. Andrew Cuomo could respond to pressure for a millionaire's tax.

    Last year, Cuomo lambasted “Albany budgeting”—the spending increases that kick in automatically unless a budget is passed to alter them. Perhaps his most important long-term budget victories were to statutorily cap Medicaid's rate of growth to match that of the consumer price index's health care component, and to peg education spending to the 10-year rolling average of personal income growth. Both numbers are around 4% this year, a state budget spokesman said.

    “It's a dramatic change,” he said. “It's tied to growth that is rational.”

    The reforms helped Cuomo close a $10 billion budget gap without raising taxes. To close the current gap, Cuomo is likely to ask for something similar. That's where the millionaire's tax comes in.

    An insider close to the Cuomo administration said the governor could yet give in on some sort of a tax—if he gets something in return from Assembly Speaker Shelly Silver.

    “You can't simply say ‘we're going to increase taxes,' ” the insider said. “There's got to be some kind of reform.” The insider said it was too early to get specific, except to say that, as with the education and Medicaid caps, reform would have to bend the cost curve of state government. Pension reform has been mentioned.

    When asked during a radio appearance yesterday whether he would support a millionaire's tax, Cuomo said he believed the state needed tax revenue to come from job growth. “If you do a short-term fix, you'll make the long-term problem worse,” he said.

    http://www.crainsnewyork.com/article/20111115/INS/111119936#ixzz1dmg3DqTE

    ================

    Cuomo: Deficit ‘Could’ Mean Special Session

    By Jimmy Vielkind Albany Times Union November 14, 2011

    Gov. Andrew Cuomo said a just-revealed $350 million budget shortfall for this year “could” prompt him to call lawmakers back into an extraordinary session before their scheduled return in January.

    “There’s been a lot of volatility in these numbers … it’s been a little bit like watching a bouncing ball over these past few weeks,” Cuomo said during a radio interview on “The Capitol Pressroom.”

    “I’m going to continue to watch it for the next few weeks, because as we get to the end of the year, we’ll be making decisions that will impact next year,” Cuomo continued. “There’s been so much volatility I want to make sure we’re not making decisions based on incorrect information.”

    Next year’s budget is now projected to be at least $3 billion in deficit, more than the $2.4 billion deficit Budget Division officials projected earlier this year. Cuomo’s last budget books increases to school and health care funding in the coming year, but Cuomo said “I don’t want to start speculating” when asked if they will hold firm.

    “There’s no doubt that the direction of the bouncing ball has been down. We are making adjustments, and there are certain adjustments we can continue to make,” he said. “They’re giving me a range of options, and then depending on those options, and spending if this trend continues, we may need a special session when I bring back the legislature.”

    Cuomo also didn’t budge on his opposition to renewing a tax on New Yorkers reporting over $200,000.

    “You know my position on taxation, and that’s my position. I’m trying to deal with the hole we have today,” he said

    http://blog.timesunion.com/capitol/archives/88461/cuomo-deficit-could-mean-special-session/

    =====================

    Cuomo Sees Budget Gaps This Year and Next

    By Thomas Kaplan New York Times November 14, 2011

    Continued tumult in the financial markets and the prospect of a weak bonus season on Wall Street have significantly darkened the state’s financial condition and could force legislators back to Albany to find additional spending cuts before the end of the year, officials in the state budget office said on Monday.

    The state is now projecting that it will be short $350 million during the current fiscal year, which ends March 31, largely because tax receipts have been lower than anticipated. For the next fiscal year, the state is facing a budget deficit of $3 billion to $3.5 billion, up from the $2.4 billion previously projected.

    “The news is grim,” Gov. Andrew M. Cuomo said in a radio appearance on Monday. “The results over the past few months have not been good.”

    Mr. Cuomo’s budget office had delayed releasing its latest update on the state’s fiscal condition, which was due two weeks ago. The governor attributed the delay to the turmoil in the financial markets; speaking on “The Capitol Pressroom” on Monday, he said it remained difficult to get an accurate reading on the state’s budget picture.

    “It’s been a little bit like watching a bouncing ball over these past few weeks,” Mr. Cuomo said. He added: “There’s been a lot of volatility. Some days we celebrate; some days we get depressed. So we’ll see how it goes over the next few weeks.”

    The budget figures released on Monday were not particularly surprising; last week, the Democratic minority in the State Senate released projections that showed a $3 billion gap for the next fiscal year. But the new figures still pose a significant challenge in the coming months for Mr. Cuomo, a Democrat who is in his first term.

    The governor, backed by Republicans in the Legislature, has declined to support the extension of the state’s so-called millionaires’ tax, which is set to expire at the end of this year. Democrats point to the tax surcharge as a solution to the state’s fiscal problems.

    Mr. Cuomo said Monday that he hoped to manage this year’s shortfall without “dramatic action,” but that, if he could not, he would call the Legislature back to Albany for a special session this calendar year.

    Budget officials have already asked state agencies to review discretionary payments and contracts and to avoid hiring, according to Morris Peters, a spokesman for the Division of the Budget.

    The projected budget gap next year is significantly smaller than the $10 billion shortfall Mr. Cuomo and lawmakers closed in this year’s budget by reducing spending on school aid and health care and by winning wage and benefits concessions from labor unions. This year’s state budget is $131.4 billion.

    To win approval for this year’s budget, Mr. Cuomo agreed to increase spending on health care and education by 4 percent next year. Asked whether he might now have to reconsider those increases — a step that would anger Democrats and labor unions — Mr. Cuomo said he did not want to speculate.

    Edmund J. McMahon, senior fellow at the Empire Center for New York State Policy, a research organization that favors reduced government spending, said the challenge Mr. Cuomo would face in closing the budget gap depended largely on whether he seeks to make up the difference entirely with spending cuts, or whether he finds other ways to generate new revenue.

    But the governor has been adamant, in his campaign and since he took office in January, that he does not want to raise taxes.

    “His job just got more difficult,” Mr. McMahon said. “But it’s not like panic time. It’s not an intractable problem. But it’s a bigger problem than it was.”

    http://www.nytimes.com/2011/11/15/nyregion/new-york-state-sees-350-million-budget-gap.html?_r=1

    ===================

    DiNapoli: Non Profits Waiting For State Checks

    By Joseph Spector Gannett News Service November 14, 2011

    The state was on average six months late in 2010 in paying non profits for services, Comptroller Thomas DiNapoli said in a report today.

    DiNapoli said the late payment is jeopardizing services. In nine of out every 10 contracts valued at $50,000 or more, payment was six months late, he said. DiNapoli said the delay has carried into the first six months of this year too.

    “Not-for-profits operate on very thin margins,” DiNapoli said in a statement. “Yet they provide vital services for vulnerable New Yorkers. Delay only costs taxpayers money and hurts New Yorkers who rely on these services. The state should ensure it gets not-for-profit contracts approved on time and address other longstanding issues that continue to harm the not-for-profit sector.”

    The state has 22,000 contracts totaling $16.8 billion with non profits, who run such facilities as health clinics and workforce development programs, the comptroller said. Non profits employed 1.25 million people statewide in 2010, making up 14 percent of the state workforce, DiNapoli said.

    DiNapoli said state law requires state agencies to process contracts within 150 to 180 days.

    http://statepolitics.lohudblogs.com/2011/11/14/dinapoli-non-profits-waiting-for-state-checks-in-the-mail/

  • Cuomo Considering Many Fiscal Options

    by The Associated Press November 30, 2011

    Gov. Andrew Cuomo says he’s considering a wide variety of revenue raising options, from his own ideas for creating private sector jobs to the millionaire tax pushed by the Assembly’s Democratic majority.

    In a round of radio interviews Wednesday, Cuomo wouldn’t rule out anything, including the millionaire tax he strongly opposed in the current budget.

    The Democratic governor said he’s open to all the “best thinking” as weakening state revenues have created an unexpected deficit and there’s a deficit of more $3 billion forecast in the next fiscal year.

    But Cuomo, who has pledged not to raise taxes, wouldn’t back any tax proposal in the interviews.

    He’s crafting his 2012-13 budget proposal now for the legislative session that begins in January

    http://libn.com/2011/11/30/cuomo-considering-many-fiscal-options/

    ==============

    Cuomo Hedges On Millionaire's Tax

    A Journal News Editorial December 1, 2011

    Who said the Occupy Wall Street movement was over, undone by a phalanx of police, front-end loaders and fuzzy precepts? There was fresh evidence Wednesday that the anti-inequality protesters are reshaping the public policy debate in New York — including in the Governor’s Office.

    Gov. Andrew Cuomo, facing a $3.5 billion budget deficit in 2012, has changed his tune on taxes: What has long been an emphatic “No” against raising taxes, or renewing a “millionaire’s tax” due to expire at year’s end, has essentially morphed into “wait and see.” The turnabout follows months of sustained pressure — from OWS protesters, anti-poverty groups, labor unions and fellow Democrats — to abandon the “no tax hike” promise, a staple of Cuomo’s 2010 campaign. (See video of Tuesday’s Editorial Board discussion on the topic atwww.lohud.com/editorialspotlight.)

    The governor has long maintained that he regards extending the state’s income-tax surcharge on the wealthy — it applies to individuals earning $200,000 or more, $300,000 for families — as a tax hike, dispensing with any hairsplitting over whether such a move constitutes an increase.

    Such clarity now eludes him.

    The Wall Street Journal on Wednesday, crediting people “familiar with (Cuomo’s) thinking,” said the governor is considering an overhaul of the state’s personal income tax rates that would raise revenue from high earners and lower taxes for others. The article stated that one plan under review included creating new, higher-income brackets. The changes would be portrayed as a “fairer tax system based on reforms and additional brackets,” as a top administration official told the newspaper.

    The governor himself addressed the issue — sort of — in a radio interview Wednesday with Albany’s WGDJ-AM (1300). “I have not decided on the economic program for the state, part of which will be how do you use the tax code to create jobs,” Cuomo said. “I’m in discussions, I have ideas, but we have no decisions.” New Yorkers are certainly paying attention.

    Cuomo, whose approval ratings have hovered near and above 70 percent for months, would lose stature among business leaders for abandoning his pledge on taxes.

    But it would hardly mark the end of Cuomo’s political world; in poll after another, large majorities of voters have backed higher taxes on the rich. More impetus came Tuesday, in a report from the Fiscal Policy Institute. It showed steep income hits on low- and middle-income earners, and for the rich, too. The wealthiest 1 percent accounted for 35 percent of the state’s income in 2007; about 31 percent in 2008.

    No matter how the math gets figured, decision time is fast approaching.

    http://www.lohud.com/article/20111201/OPINION/312010009/Cuomo-hedges-millionaire-s-tax

  • The US: where raising taxes is never an option.

  • Boygabriel said:

    The US: where raising taxes is never an option.

    Cuomo is waffling. He might raise them after all.

  • Truly a new dawn would be upon us.

    One where we consider revenue when looking at balancing books.

  • If we are unable to increase revenue, we must decrease spending, right?

  • lol @ "unable"

  • Wanting to get a raise, and being able to get a raise are two different things: Not only does your boss have to have money to give you. you have to be able to get it from him.

    In this case, government is the employee and taxpayers (people, corporations, etc) are the boss.

    Should government be exempt from this?

  • Sometimes leaders show leadership.

  • Leadership is fine, but governments are ultimately subject to the will of their constituents.

  • the will of constituents becomes complicated when they think Saddam was involved in 9/11 and that the gov should stay out of medicare and that their mortgage deduction isn't a government benefit.

    50% of Americans get most of their news from local tv broadcasts.

    Yeah.

  • The populace is what it is.

    ....do you want a system in which only smart entities are allowed to influence government?

    Who will get to decide who is smart??

    I think once people trust the government will use their money responsibly, they will give up easier. (don't hold your breath)

  • I want leaders who lead.

    I vote for and support progressive groups whether national or local.

    "it is the way it is" doesn't get us anywhere.

  • You seem opposed to buying people off once they are in office, so you should either influence the populace to change who they vote into office or subvert their vote so your candidates can win.

  • It is sounding as if some version of progressive taxation will replace the present high earner tax surcharge. ...to "keep his word to those opposed to the tax" Cuomo might create something new, and insist it is actually something different.

    http://www.nytimes.com/2011/12/05/nyregion/andrew-cuomo-calls-for-stimulus-package-in-addition-to-tax-reform.html?_r=2

    NYS could use the money.

  • ^^ done ^^.

    When one takes the part I bolded into account, this is actually still a tax cut. Only now it is now not a $4B tax cut, just a $2B one.

    Cuomo and Leaders of Legislature Agree to Overhaul Taxes

    By THOMAS KAPLAN December 6, 2011

    Gov. Andrew M. Cuomo and legislative leaders announced on Tuesday that they had reached an agreement to overhaul New York State’s income tax, creating a higher-tax bracket for the highest-income residents and reducing the tax rate for millions of middle-class residents.

    The leaders, seeking simultaneously to make the state’s income tax system more progressive and to increase tax collections during a down economy, announced their agreement as lawmakers began to arrive at the Capitol for an expected special session of the Legislature later this week.

    The agreement was reached just weeks before a state tax surcharge on high-income earners was set to expire.

    “This would be lowest tax rate for middle class families in 58 years,” Mr. Cuomo said in a statement. “This job-creating economic plan defies the political gridlock that has paralyzed Washington and shows that we can make government work for the people of this state once again.”

    The tax-rate changes would generate $1.9 billion in annual revenue; the expiring surcharge, sometimes referred to as a “millionaires’ tax,” had been generating about $4 billion a year.

    The state’s current income tax rates are relatively flat, taxing any individuals who earn $20,000 or more, as well as couples who earn $40,000 or more and file joint tax returns, at the same 6.85 percent rate.

    But for the last three years, individuals who earned more than $200,000 a year have also been subject to the tax surcharge, paying 7.85 percent on income from $200,000 to $500,000, and 8.97 percent for income over $500,000. For couples filing jointly, the surcharge kicked in at $300,000.

    Under the proposal announced on Tuesday, for married couples filing jointly, income from $40,000 to $150,000 would be taxed at 6.45 percent; from $150,000 to $300,000 at 6.65 percent; from $300,000 to $2 million at 6.85 percent; and over $2 million at 8.82 percent. The tax brackets would be indexed to the rate of inflation and would take effect next year. The new top tax bracket would last through 2014; the others would be permanent.

    The agreement to impose taxes higher than 6.85 percent on the highest-earning New Yorkers marks a reversal for Mr. Cuomo, a Democrat, who ran for governor last year on a platform of opposing tax increases and who said that renewing the tax surcharge could hurt the state by motivating wealthy residents to move to lower-tax states.

    But Mr. Cuomo has come under increasing pressure from Democrats and labor unions in recent weeks as the sluggish economy weakened the state’s financial picture, widening next year’s projected state budget gap to as much as $3.5 billion, and as the Occupy Wall Street movement directed more attention to the issue of income inequality.

    To blunt the impact of his change in position, Mr. Cuomo is pointing to the fact that under the new rates, all taxpayers will be taxed at the same rate, or lower, in 2012 as they have been this year. But those earning more than $2 million will pay a higher tax rate than they would have had the tax surcharge been allowed to lapse.

    The Assembly speaker, Sheldon Silver, a Manhattan Democrat, planned to brief his caucus on the proposal at a closed-door meeting on Tuesday afternoon. The Republican majority in the State Senate planned to discuss the plan on Wednesday, and it appeared very likely that the governor would call the Legislature into session to take up the package after those meetings.

    It remained to be seen whether the revenue to be generated by the deal would satisfy liberals and labor unions who wanted the more lucrative surcharge to be renewed. But Mr. Silver can claim the tax changes as at least a partial victory on the issue — and an unlikely one, considering that Mr. Cuomo for the past 11 months insisted that under no circumstances would he support any tax increases.

    “Assembly Democrats share the governor’s belief that we need to restore fairness and equity to our tax system,” Mr. Silver said in a statement. “Someone who makes $50,000 should not be paying the same tax rate as someone making $5 million.”

    Not all of the money to be raised by the new top tax bracket will be kept for balancing the state’s budget, as the agreement also contained several new tax incentives for businesses as well as other programs that the governor said would encourage job creation.

    The measures included $50 million to help areas repair flood damage from Tropical Storms Irene and Lee, the creation of an infrastructure fund to finance a new program of road and bridge construction, and new state financing to support job-training programs for poor, urban youths and to provide tax credits for businesses that hire them.

    The agreement also reduces, for small businesses, a payroll tax that helps finance the Metropolitan Transportation Authority. Mr. Cuomo and the legislative leaders said that the changes would cut taxes by $250 million, and that the state would compensate the transportation authority.

    It remained unclear on Tuesday exactly how the state would reimburse the transportation authority for the lost revenue. And some transit advocates were concerned that replacing a dedicated tax with an appropriation from the Legislature could make that portion of mass transit financing more vulnerable in the future to budget cuts.

    But given the pitchforklike atmosphere around the payroll tax — a bête noire and campaign talking point of many suburban Republicans — a small reduction may have been the best outcome that the authority could have hoped for.

    Bill Henderson, executive director of a state-financed transportation riders’ group, said he was relieved that the tax was not eliminated entirely. “It’s supposed to be a secure source of funding from the state government,” Mr. Henderson said, “but I don’t know if there is such a thing as a secure source of funding from the state government any longer.”

    After paying for those new measures, the state would have about $1.6 billion in new revenue for use in balancing next year’s budget, the governor’s office said. That money would then be used to bring next year’s projected state budget gap down from $3.5 billion to about $2 billion.

    Michael M. Grynbaum contributed reporting from New York.

    source: http://www.nytimes.com/2011/12/07/nyregion/cuomo-and-legislative-leaders-agree-on-tax-deal.html?_r=1&scp=1&sq=Cuomo Strikes Deal to Raise Taxes on the Wealthiest&st=cse

  • So by not renewing the existing tax, Cuomo is leaving the state $2 billion short next year?

    That's nuts!

  • Booklaw-

    Yup, that is the analysis of those who dig deeper than the rhetoric.

    A lot different than the Albany spin....

    The policy wonks will write up more articulate analysis over the next week or so, but Cuomo has kept his promise to cut, not raise taxes.

    Like it or not, government funded programs must lose about $2b a year starting Jan 1. ....unless we borrow, of course.

  • What a perfect time to cut taxes.

    It's guaranteed to work.

    It's worked all those other times.

    Ask Britain. How's their austerity doing?

  • If we give Cuomo the benefit of the doubt, he cut taxes only to the degree he felt he had to. ...but you are free to think of him as being a supply sider if you want.

    Once we move beyond this rhetoric, it is time for the various government agencies to once again ensure that their share of the cut will be as small as possible.

    Another wave of cuts will arrive in 2012. Welcome to the New Normal.

  • It's not rhetoric, it's fact:

    It's not working in the UK, therefore it's not going to work here, IMO.

    We need a real plan, not cuts cuts cuts and more cuts.

  • booklaw said:

    So by not renewing the existing tax, Cuomo is leaving the state $2 billion short next year?

    That's nuts!

    I think its worse than that

    Without action, the tax (funding stream) expires December 31, 2011. It is worth around $5B a year to the state.

    After paying for those new measures, the state would have about $1.6 billion in new revenue for use in balancing next year’s budget, the governor’s office said. That money would then be used to bring next year’s projected state budget gap down from $3.5 billion to about $2 billion.

    If I'm reading this properly, the projected budget was $3.5 billion with no tax. With the tax we would have had a $1.5 billion SURPLUS. Instead we've got a $2 billion deficit. So he's actually opted to please everybody by reducing the effective tax on all married joint filing taxpayers including those making over $2 million a year while at the same time diverting money from the general fund for earmarked items and yet still claiming to have "rationalized" the tax laws.

    You have got to love politicians...

  • The spin of the various media sources has been fun as well.

    Predictably, today's Post proclaimed that the Governor has reneged on his promise to not raise taxes. Ah, rhetoric.

    Of course, the resulting revenue shortage will be used by the state in arguments with the various labor unions. The CSEA, SEIU, UFT etc are gonna be even more screwed in 2012 than they are now. We are entering an era in which there are few employment sectors that are secure.

  • whynot_31 said:

    If we give Cuomo the benefit of the doubt, he cut taxes only to the degree he felt he had to. ...but you are free to think of him as being a supply sider if you want.

    Once we move beyond this rhetoric, it is time for the various government agencies to once again ensure that their share of the cut will be as small as possible.

    Another wave of cuts will arrive in 2012. Welcome to the New Normal.

    Some of the NYS cuts already in the works:

    http://whocaresido.wordpress.com/2011/12/07/new-york-city-releases-more-budget-cuts-to-already-struggling-human-service-programs/

  • The tax code is a complicated thing, and not an exact science.

    Several years must pass before accurate information is available. This report details where NYS collected its revenue, and where it spent it in 2004 - 2005:

    http://www.ibo.nyc.ny.us/iboreports/tnydec2011.pdf

  • Whoa, numbers galore for FY 2012 and FY 2013!

    My head hurts.

    http://publications.budget.ny.gov/eBudget1213/ExecutiveBudget.html

This discussion has been closed.