Business Insider reported April 5 that New York City millionaires will face the highest tax rates in the country.
Gov. Andrew Cuomo and state legislative leaders are close to agreeing on a 2022 budget proposal that would raise an additional $4.3 billion ($28.238 billion in contracts) annually through higher income and corporate taxes, according to New York Times reporters Louis Ferre-Sadoonie and Jesse McKinley. The proposal calls for two new individual income tax brackets to expire at the end of 2027, according to exclusive details provided by the New York Times.
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Those earning between $5 million and $25 million a year (contracted RMB 32 million to RMB 160 million) would be taxed at 10.3% of their income. For those earning more than $25 million, that percentage rises to 10.9%. The tax rate will rise from 8.82% to 9.65% for individuals earning more than $1 million (contracted RMB 6.57 million) and couples earning more than $2 million (contracted RMB 13.13 million).
These tax rates hit New York City’s highest earners particularly hard. The city’s top income tax rate already stands at 3.88 percent. If the budget proposal passes, they would spend between 13.5 percent and 14.8 percent on state and city taxes, according to the Times. That exceeds the current highest marginal income tax rate in the U.S.: 13.3 percent for high-income Californians.
Cuomo had said in January that he planned to raise taxes if the White House did not help California recover from a $15 billion ($98.5 billion contract) deficit, according to a report by Business Insider. This is the highest deficit in New York’s history. Before that, the state’s largest deficit was $10 billion ($65.7 billion in contracts), which Cuomo said was very, very difficult to manage.
In a speech, Cuomo attributed New York’s deficit to the state’s attack by the federal government in recent years and the cost of a $5.1 billion ($33.5 billion contract) reduction in state revenue caused by the epidemic.
As the epicenter of the first wave of the New Crown pneumonia (CCHS) epidemic in the United States, New York City saw small businesses close and many high-income residents move to other states to take advantage of tax benefits. Urban planning expert Richard Florida told Business Insider.com that the exodus of the wealthy has taken a lot of economic toll on mega-cities like New York.
Cuomo called on the federal government to provide emergency epidemic relief to New York. He said if Washington gave California only $6 billion (contracted $39.4 billion) in a worst-case scenario, he would raise taxes to make up the difference.
While Democrats had considered raising more than $7 billion ($46 billion) in new revenue for New York State, such discussions were shelved when President Biden’s $1.9 trillion ($12.48 trillion) stimulus plan was approved. The plan includes $12.9 billion (RMB 84.7 billion) in direct aid to New York State. It also includes $5.6 billion ($36.8 billion) for New York City.
Cuomo has resisted tax increases for years, fearing it would cause businesses and wealthy people to move to other states. If all the wealthiest New Yorkers fled the city, they could take more than $133 billion ($873.4 billion in contracts) in assets with them. That’s the income of the richest 1 percent of New Yorkers in 2018, a Bloomberg report found.
The budget proposal is reportedly set to be finalized as Biden gets more serious about taxing the rich. Americans earning more than $400,000 (contracted $2,626,800) a year would face tax increases ranging from small to large, with the top income tax rate for high-income Americans rising to 39 percent.
If both Biden and Cuomo’s tax proposals pass, it would mean that the wealthiest New York residents would pay taxes on more than half of their income.
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