The highest-earning New Yorkers would face the nation’s steepest income tax rate under a budget lawmakers expected to vote on Tuesday.
It would serve as a win for the Democratic party’s left wing, who say that millionaires in Manhattan penthouses have fared far better amid the pandemic then struggling small businesses and low-income New Yorkers.
States including California, Minnesota and Washington are also considering wealth taxes, raising taxes on capital gains or setting new top income tax rates. President Joe Biden — who said on the campaign trail he’d raise income taxes on high earners — has proposed tax hikes on wealthy individuals and families and a corporate tax rate increase to pay for his infrastructure plan.
Democrats in New York hope the tax increase could bring in at least $3 billion and prevent the need for spending cuts in years to come. Assembly Member Helene Weinstein said the bill would be introduced Tuesday, and Sen. Liz Krueger said the leaders of the Assembly and Senate have agreed on the bill.
New York’s top income tax rate is currently 8.82%, while New York City residents face an additional 3.88 percent top tax rate.
Democrats want to raise the combined top tax rate for New York City millionaires above California’s top income tax rate of 13.3 percent, though exact details of the proposal weren’t available Tuesday afternoon.
Senate Democratic Majority spokesperson Mike Murphy said he expected the public could view the revenue bill online shortly. Spokespeople for the governor and Assembly Speaker Carl Heastie’s office didn’t immediately respond to request for comment.
Democrats won control of the state Senate in 2018, but they gained more leverage last year by winning a veto-proof supermajority.
Gov. Andrew Cuomo expressed newfound openness to raising taxes on top-earners this year — his budget proposal included a limited, temporary tax increase on high-earners if New Yorkers didn’t receive extra COVID-19 aid.
He’s also long warned that raising taxes on the wealthy could drive them out of New York at a time when the state’s economy is still recovering from COVID-19 economic shutdowns last week. His budget director, Robert Mujica, has said the top 1 percent of earners pay 40 percent of New York’s income taxes.
And Mujica has said an additional $12 billion in expected federal COVID-19 aid could prevent the need for a tax hike.
But Democratic legislative leaders who have pushed forward with a proposed tax hike said there’s no conclusive evidence that tax hikes drive out the rich. And they criticize years of “fiscal austerity” under Cuomo, as health care costs rise and educational advocacy groups call for more spending on schools.
Medicaid costs have skyrocketed as New York has boosted enrollment, raised the minimum wage for all workers and taken on more Medicaid bills once shouldered by counties.