Mayoral candidate McGuire: State tax hikes will trigger NYC exodus
Will the last high earner to leave New York please turn out the lights
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Gov. Andrew Cuomo and state legislators were poised Monday night to impose $4 billion in new taxes as they tried to hammer out the final details of New York’s s overdue, roughly $200 billion budget.
The key issues separating the sides — who’ve blown past an April 1 budget deadline — included a plan to legalize sports betting and whether to dole out benefits to illegal immigrants and ex-cons.
But lawmakers appeared ready to wallop New York’s higher earners and big businesses with an array of new taxes — despite a $12.6 billion infusion of cash from President Biden’s $1.9 trillion COVID-19 stimulus measure that US Senate Majority Leader Chuck Schumer (D-NY) has said is enough to balance the budget.
Andrew Rein, president of the Citizens Budget Commission, called the planned tax hikes “economically risky and fiscally unnecessary” given the federal bailout and higher-than-expected tax receipts during the past fiscal year.
“The simple truth is we have $22 billion more than the state expected when the budget was proposed in January — $22 billion over the next two years,” he said.
“That’s almost $1 billion a month.”
Rein also said the tax plan made a mockery of the state’s official, Latin motto, “Excelsior.”
“I look at this as a budget worthy of our state motto … which means ‘upward’ — both on spending and on taxes,” he said.
Democratic mayoral candidate Ray McGuire, a former Citigroup executive, also warned Monday, “What the state is considering will push companies and higher-income families out of the city, which will cost us tax revenue and jobs.”
“If we needed to raise taxes to balance the budget, I would agree that people like me who have done well should pay more to help our city,” he said.
“But thanks to billions in aid from the federal government, we don’t need to raise taxes.”
Another Democratic mayoral candidate, current front-runner Andrew Yang, has warned that higher taxes could lead people to “actually vote with their feet and head to Florida.”
The budget proposal would levy a new “millionaire’s tax” that raises the combined state and local rate for wealthy Big Apple residents to between 13.5 percent and 14.8 percent — surpassing California to create the highest income tax rate in the country.
Individuals who earn more than $1 million and couples earning more than $2 million would see their rates increase from 8.82 to 9.65 percent through at least 2024.
Two new tax brackets would also be created, one taxing income beyond $5 million at 10.3 percent and another in which income more than $25 million would be taxed at 10.9 percent.
Another measure would raise the state’s corporate franchise tax from 6.5 percent to 7.25 percent through 2023.
“The legislature is about to pass the largest spending budget in New York’s history, funded by substantial tax increases on business and the relatively small number of households that already generate most of the state’s income tax revenues,” said Kathryn Wiley, CEO of the New York City Partnership, the lobbying group for the Big Apple’s top corporations.
“The best one can say is that it could have been worse, but this is small comfort to the affected taxpayers. There is no question that spending on those who have suffered the greatest losses during the pandemic is a worthy objective, but it remains to be seen whether the revenues will be realized as taxpayers reflect on their location options.”
During a conference call with reporters, Cuomo said a bill to allow legal, online sports betting in New York would be part of the budget and could open the floodgates to billions of dollars in wagers that are projected to eventually generate $500 million in annual revenues for the state.
“We have a conceptual agreement on all issues,” he said.
The major sticking point involves who would handle the action, with the governor favoring a single, app-based bookmaking operation and the Legislature favoring several.
The Legislature also wants to allow sports betting on Native American reservations and at the state’s “racinos.”
Lawmakers who oversee gambling legislation objected to Cuomo’s top-down approach to mobile sports betting, but said they may not be able to stop it.
“This is the first I’m hearing that the Cuomo model [for mobile sports betting] is a done deal,” Assembly Racing and Wagering Committee Chairman Gary Pretlow (D-Mount Vernon) said.
“I’m not really keen on his model.”
Another vexing issue has been the creation of an “excluded workers fund” to provide unemployment insurance and other benefits to illegal immigrants and paroled prisoners.
The $2.1 billion proposal has strong support among progressive New York City lawmakers but more moderate, upstate Democrats have raised objections, called the idea of rewarding people who don’t pay income taxes a “gift” to Republicans who will hammer them with it during next year’s elections.
“The excluded workers fund is what got people shook up,” said a Democratic close to the budget talks. “They’re trying to clean it up.”
The spending plan has sparked vigorous debate among Democrats who control both the Assembly and Senate.
“There’s been discussion about it. I’ll leave it at that,” said Assemblyman Michael Benedetto (D-Bronx), who supports the workers fund.
Other spending plans likely to be included in the budget include a $1.4 billion increase in aid for needy school districts, funding for statewide pre-K programs and a tuition assistance program for SUNY and CUNY students.
Also expected is a deal on $2.3 billion in rent relief for tenants impacted by the COVID-19 crisis, thanks to Albany getting $2 billion in federal funds. Sources say additional state aid could be added but no final amount has been released.
Cuomo said this year’s budget process has “been complicated” by the COVID-19 pandemic, which has prevented officials from meeting in conference rooms in the state Capitol to hash out their differences.
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