Bawl Street: Top NY companies mulling mass exodus over tax hike plan
New York state income tax filing extended to May 17
State and fed tax hikes would be a double whammy pushing more New Yorkers to Florida
Michael Cohen arrives at Manhattan DA’s office for Trump probe interview
New York, still reeling from a once-in-a-century pandemic, now faces a plague of tax increases to fuel a massive 23-percent surge in state spending proposed by Albany Democrats.
The $7 billion in tax increases recommended by both the Dem-controlled Assembly and Senate includes higher levies on the incomes of wealthy New Yorkers, estates and corporations — putting a big “We Don’t Want You Here” sign on the Empire State.
Many top corporations are already eyeing the exits, business advocates said.
The brazen tax-and-spend palooza comes as a weakened three-term Gov. Andrew Cuomo fights for his political life, mired in the COVID-19 nursing home and sex harassment scandals.
The taxes would prop up a record-shattering $208 billion in spending — matching the combined state budgets of Texas and Florida, and nearly equaling the proposed $227 billion of California, a state with double New York’s population.
The state’s ballooning fiscal blueprint — it has increased by more than 600 percent since 1984 — eclipses the budgets of many large countries, including Portugal, Turkey, Norway, Denmark and Indonesia.
The tax hikes, if implemented, would further pad the Empire State’s already top-in-the-nation state and local government tax burden, according to the Tax Foundation research group. About 14 percent of New York residents’ income goes to state and local taxes.
The major tax hikes include:
- Raising the rate on millionaires (singles making more than $1 million and couples earning more than $2 million) from 8.82 to 9.85% percent, with the rate gradually topping out at 11.85% for those in the $25-50 million bracket
- A new capital gains tax of 1% on those earning more than $1 million a year; a tax on second homes in NYC; an estate tax of 20% (up from 16.5%)
- Corporate franchises, utilities and insurance companies would be hit with an 18% “surcharge” — which could be passed off to customers in higher bills
The Senate and Assembly have their own spending proposals, which are similar but not identical. The record spending includes:
- A $5.7 billion one-year increase in education aid [Senate], which includes funding to help schools emerge from COVID-19. That funding also includes $1 million for implicit bias training of teachers and $300,000 for racially and culturally inclusive curriculum
- $2.1 billion “Excluded Worker Fund” that would provide unemployment insurance benefits to illegal residents and other non-citizens ineligible under federal programs. Undocumented immigrants would also be eligible for medical coverage under the state’s public health insurance
- $1 billion for small businesses ($500 million for Small Business Assistance Grants and $500 million for Commercial Rent Relief)
- $400 million in additional rental assistance
- $200 million to help boost staffing in nursing homes ravaged by the coronavirus
There are also tens of billions of dollars for lawmakers’ pet projects restored or added to the budget. The pork includes: $10 million for county fairs; $15 million for Council on the Arts; $200,000 for unspecified “labor initiatives”; $350,000 for hops and barley research at Cornell; $75,000 to the Maple Growers Association; $2,000 for the Wine and Grape Foundation; $7 million for zoos, botanical gardens and aquariums, and $1 million for the Public Utility Law Project.
And while big corporations and rich New Yorkers get targeted, one industry gets taken care of: Hollywood. The tax credit for movie companies shooting in New York is extended through 2026.
The tax hikes on wealthy residents are problematic because they already pay most of the freight — and have the means to leave the state, critics said.
New York’s top 1 percent of income earners generate 44 percent of income tax revenues. Raising the top income tax rate from 8.82% to a maximum of 11.85% could trigger an exodus, particularly for wealthy retirement-eligible taxpayers.
It’s a triple whammy when factoring in tax increases on corporations and inheritances/estates, pro-business advocates said.
“It’s a hell of a lot cheaper to live and die elsewhere,” said Ken Pokalsky, vice president of the NYS Business Council.
“No other state is doing significant business tax increases. This will put New York out of step with what other states are doing with their recovery efforts.”
New York’s well-to-do already got whacked with thousands of dollars in tax hikes after former President Trump and the then-GOP-run Congress imposed a $10,000 cap on write-offs of their high New York state and local taxes on their federal tax returns.
Meanwhile, Washington is aiming another financial double-tap at upper middle class New Yorkers, with President Biden saying he wants to hike income taxes on joint filers making more than $400k annually from 37% to 39.6%.
When you add up the federal, state and city income levies, Gothamites making more than $1 million will hand over more than half their pay to the taxman.
Critics complain that the Albany Democrats are pushing the tax hikes for ideological — not financial — reasons, to placate a growing left wing that is obsessed with taxing the rich to increase spending on social programs.
A spokesman for U.S. Sen. Chuck Schumer, the powerful majority leader from New York, said the $12.6 billion the feds have dedicated to Albany’s coffers in the $1.9 trillion federal COVID-19 stimulus package wiped out any projected state deficit.
Essentially, he suggested, Albany doesn’t have to raise an extra dime to pay its bills.
Yet right now the three Democratic leaders of state government — Gov. Cuomo, Senate Majority Leader Andrea Stewart-Cousins and Assembly Speaker Carl Heastie — are negotiating in earnest to come up with a final fiscal blueprint from two enormously-expanded budget proposals: the Legislature’s $208 billion plan and Cuomo’s $193 billion scheme. The final budget bills by law must be enacted by April 1.
The historic push for taxes comes at a time of turmoil and political realignment in Albany.
Democrats in both houses of the Legislature for the first time have a theoretical veto-proof majority. If there is a dispute with Cuomo over the budget — the governor calls for “only” a 10 percent increase in spending — they could attempt to override his budget vetoes.
However, moderate Democratic senators representing well-heeled suburbs would be wary of swallowing such huge tax hikes when the state is awash in federal COVID-19 stimulus cash, sources told The Post. And Republican lawmakers said the tax hike plan is simply crazy.
“At the start of our budget process, the state was facing a significant budgetary shortfall. However, that shortfall was filled with increased state revenues and over $12 billion in federal stimulus funds. The state could have appropriately funded education, infrastructure, health care, support for small businesses, and many other causes without raising $1 in new taxes,” said Sen. Alexis Weik (R-Suffolk).
“Amazingly, Senate Democrats still managed to create $7 billion in new taxes.”
Budget watchdogs agree that tax hikes are now unnecessary — and could be counterproductive.
“The reality is that given the money that’s come in, the increases aren’t necessary,” said Andrew Rein, executive director of the Citizens Budget Commission.
“The triple threat of personal income tax increases, capital gains tax increases and, for some, estate tax increases, will just increase the incentive for the wealthiest New Yorkers, who do pay a disproportionate share of taxes, to leave New York.”
The head of the association that represents the city’s largest Wall Street, financial and tech firms said even talk of tax hikes is reinforcing the Big Apple’s already rotting image of being bad for business.
Twenty top finance, private equity and tech firms are considering fleeing to Florida, said Kathryn Wylde, CEO of the New York City Partnership.
“Any conversations that have gone on are based on ideology and the moral issue around income inequality. But raising taxes won’t fix that,” Wylde said.
“The conversation has to be, ‘How do we replace 1 million jobs that have left New York State.’ We’re not having these conversations. Instead we are saying ‘punish the rich.’”
The orgy of tax increases is also sending a chill through Gotham’s outer-borough business communities — particularly in Queens, which is still smarting from Amazon withdrawing its plan to open a massive East Coast headquarters there over a tax-break dispute.
“You don’t tax your way into prosperity. We need people to make bold investments in New York City. Tax hikes are going to discourage investment,” said Queens Chamber of Commerce CEO Thomas Grech.
Sources close to the state budget talks told The Post that moderate Democrats in the Legislature are wary of the massive tax-hike packages put out by their conferences, and won’t go to the mat for them if Cuomo pushes back.
One Senate Democratic insider called the tax-and-spending plan a “giant wish list” and predicted that “reality would set in” and the tax hikes would be scaled back after negotiations with the governor.
But Stewart Cousins (D-Yonkers) defended the higher taxes to meet the needs of New Yorkers that went unaddressed even before the pandemic. She said asking the wealthiest New Yorkers to pay more will put the state on a more stable financial footing.
New York’s influential labor movement, led by the AFL-CIO, has also thrown its weight behind the Legislature’s massive tax and spending plan.
Share this article:
Source: Read Full Article