New York City‘s top earners may be slugged with a massive tax increase that will see them pay the highest taxes in the country, according to a state budget plan under consideration.
New York Governor Andrew Cuomo and state lawmakers are close to finalizing a spending plan that will see corporate and income taxes increase by $4.3 billion per year, the Wall Street Journal reported.
Under the so-called ‘millionaire’s tax’, income taxes would rise from 8.82 per cent to 9.65 per cent for individuals who make more than $1 million or married couples who make more than $2 million.
Anyone earning more than $5 million would have to pay a rate of 10.3 per cent, and those with an annual income of more than $25 million would be taxed at 10.9 per cent – the first time earners in those top brackets have faced additional taxes.
When combined with city taxes of 3.88 per cent, it would see New York’s wealthiest paying a combined state and local tax of up to 14.8 per cent.
Embattled New York Governor Andrew Cuomo says tax increases are still necessary, even after the state received $12.7 billion from the federal stimulus package
New York’s top earners will pay the highest tax rates in the country if the budget is passed, higher even than California’s
On top of increases to any individuals earning more than $1 million, new tax rates will apply to anyone earning more than $5 million
This would make New York tax rates higher than California, which is currently the state that has the top tax rate in the United States of 13.3 per cent on income over $1 million.
Corporate tax rates would increase from 6.5 per cent to 7.25 per cent through to 2023, the Journal reported.
State legislators in Albany have been locked in intense negotiations for days on the spending plan, and are expected to resume work on Monday after taking a break Easter Sunday.
The budget is already long overdue, and state officials have warned if it isn’t passed by Monday, the state’s 40,000 employees risk not being paid this week.
The Journal reported that the extra tax revenue would be used to pay for schools, help prop up tenants and small businesses behind on their rent, and provide funding for undocumented workers.
The New York Post reported schools could see an extra $1.4billion in funding from the state, as well as money for statewide pre-K programs and expanding university tuition.
Last month, Congress passed Joe Biden’s $1.9 trillion COVID relief package which saw New York state government receive $12.5 billion and New York City $6.1 billion.
The state had been left with an estimated $15 billion budget deficit as a result of the pandemic.
Senate Majority Leader Chuck Schumer, of New York, said he had done everything he could to get his home state a fair deal from the stimulus package, and argued state tax increases were unnecessary.
Responding to the Federal stimulus package, Cuomo, who has resisted calls to resign after being accused of sexually harassing seven women, said ‘tax increases are on the table’.
‘It is the difference between $12.5 and $15 (billion).
‘And don’t get me wrong, the $12.5 billion is very, very helpful. But as you know, because I’ve said it a hundred and fifty times, we needed $15 billion in my opinion,’ Cuomo said.
Prominent New York Democrats have been split over whether the proposed tax increases went far enough.
Chuck Schumer, the Senate Majority Leader, said he had done all he could in stimulus package talks to get a fair deal for his home state of New York
Alexandria Ocasio-Cortez has previously called on Gov Cuomo to impose a billionaire’s tax to fund schools and help alleviate poverty in the city
Last year, NYC Congresswoman Alexandria Ocasio-Cortez called on voters to pressure Cuomo and state lawmakers to approve a ‘billionaire’s tax’.
‘It’s time to stop protecting billionaires, and it’s time to start working for working families,’ she Tweeted last July.
The Congresswoman, whose district comprises parts of the Bronx and Queens, said at the time up to $50 billion in tax hikes on the wealthy was needed to avoid deep service cuts to schools and the needy.
New York City suffered a near-economic collapse as COVID-19 swept through the city last spring.
Around 420,000 of the city’s wealthiest residents had left New York by May for second homes.
In August, Cuomo begged the rich to return amid tax hike fears saying he would ‘buy you drink’ and ‘cook dinner’.
It’s estimated that the top 1-2 per cent of wealthy city residents are responsible for half of the state’s personal income taxes.