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Over the weekend, both houses of the state legislature proposed the tax hike on New York’s wealthiest to help close the record $15 billion financial shortfall the state faces due to the COVID-19 pandemic.
Though New York is due to receive an influx of cash from President Joe Biden’s COVID-19 relief bill, legislators believe that the gap still needs to be closed and that the tax on the rich could aid that effort.
New York is expected to receive approximately $23.5 billion from the relief bill that Biden signed into law last week.
Senate Majority Leader Chuck Schumer said the state government will get about $12.7 billion, while New York City will receive an estimated $6.1 billion. The state's counties will get about $3.9 billion, while $825 million will go to small cities, towns, and villages in the state.
“The robust package, the robust basket of aid that we have been able to put together and pass yesterday, will affect just about every aspect of New York life where there has been trouble,” Schumer said.
The tax increases are part of a $208 billion spending plan introduced by both houses and would raise the rates paid by New Yorkers who earn more than $1 million, while imposing a new levy on capital gains for that tax bracket.
“We are receiving significant federal funding, but we must also ask those who can do more to step up and help,” Assembly Speaker Carl Heastie said.
“The COVID-19 pandemic impacted every aspect of our lives, and we need to make investments that will aid in our state’s recovery, while ensuring that New Yorkers continue to have access to the vital services they need.”
Assemblymember Helen Weinstein added: “Our budget makes critical investments in our communities, in our people, and in helping our state recover from the COVID-19 pandemic.
“From funding for education to quality, affordable housing to water and transportation infrastructure, the Assembly Majority is dedicated to ensuring that our budget improves the lives of all New Yorkers.”
Under the proposal, the tax rate for those earning more than $1 million, or couples making more than $2 million would rise from 8.82 percent to 11.85 percent.
A new tax bracket for residents earning between $5 million and $25 million would be established, with a separate one created for anyone earning more than $25 million. It would also include a new capital gains tax worth 1 percent for individuals earning more than $1 million annually.
If approved, a new state tax would be imposed by those with a second home in New York City, the estate tax would rise from 16 percent to 20 percent, and there would be an 18 percent “surcharge on corporate franchises, utilities, and insurance companies.
“We must also ask those who can do more to step up and help," Heastie said. "The COVID-19 pandemic impacted every aspect of our lives, and we need to make investments that will aid in our state’s recovery, while ensuring that New Yorkers continue to have access to the vital services they need.”
Not all lawmakers were as pleased with the budget proposal as the Democrats, who control both houses.
Hudson Valley Assemblyman Mike Lawler called the proposed tax hike “insane” and cautioned that it could lead to a mass exodus of New York’s wealthiest residents.
“New Yorkers are being taxed to death,” said. “As we try to recover from the pandemic, the last thing we should be doing is adding to the enormous tax burden our residents already suffer under. Increasing spending at a time when we are relying on the federal government to bail us out is insane.
“Democrats will tout that this is the ‘rich’ paying their ‘fair share,’ but if the ‘rich’ continue to leave our state in a mass exodus, middle-class families will be stuck with the enormous bill,” Lawler continued. “That’s a catastrophic situation we could easily find ourselves in.”
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