New York Governor Andrew Cuomo and state lawmakers are finalizing a budget agreement that would impose $4.3 billion in new corporate and income taxes per year, bringing the tax rate for top earners in New York City to the highest combined local rate in the country.
The budget proposal, which was due April 1, would create a new “millionaire’s tax” that increases the combined state and local rate for wealthy New York City residents to between 13.5 percent and 14.8 percent — 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.
Additionally, two new tax brackets would be introduced: one taxing income above $5 million at 10.3 percent and another taxing more than $25 million in income at 10.9 percent.
The state’s corporate franchise tax would also increase from 6.5 percent to 7.25 percent through 2023.
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., N.Y.) 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” as the state has received $12.6 billion in cash from President Biden’s $1.9 trillion COVID response plan that Schumer has said is enough to balance the budget.
“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, according to the New York Post. “That’s almost $1 billion a month.”
Democratic mayoral candidate Ray McGuire, a former Citigroup executive, on Monday warned that the tax hikes “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.”
Lawmakers are still working to finalize the $200 billion budget agreement five days after the deadline after disagreements over a plan to legalize sports betting and whether to give benefits to illegal immigrants and ex-convicts.