March 2011
February 23, 2011

NYSUT to lawmakers: Keep the millionaires' tax

Author: Clarisse Butler
Source: NYSUT United
Caption:

With proposed spending cuts of $9 billion being floated to close the state's deficit, nearly every sector, led by education and health care, would face significant setbacks. The devastating executive budget proposal, however, exempts the state's highest earners from that "shared sacrifice."

"Governor Cuomo's proposal calls for unbearably deep cuts to public services even as the wealthiest 3 percent of New Yorkers would enjoy a multibillion-dollar tax break," said NYSUT Executive Vice President Andy Pallotta. "We can't balance the budget on cuts alone. This flies in the face of logic to tell the poorest New Yorkers to do without while handing billions back to those who can most afford to weather the storm."

NYSUT, with support from economists, other union leaders, advocates for working families and a majority of New York voters, is insisting lawmakers extend the surcharge on high earners — the millionaires' tax — to help the state deal with its $10 billion shortfall.

The current personal income tax surcharge, which was enacted in 2009, is set to expire at the end of the year. The plan increases the tax rate for married taxpayers filing jointly with incomes above $300,000 from 6.85 to 7.85 percent; for those earning more than $500,000, the rate is 8.97 percent. Extending the surcharge will provide more than $1 billion for the 2011-12 state fiscal year, and about $5 billion for 2012-13.

The state's financial services industry has already bounced back and is churning out record profits — and hefty bonuses. Meanwhile, hundreds of thousands of low- and middle-income workers remain unemployed or underemployed. A budget proposal relying on cuts to the services most of those workers and other average New Yorkers depend on will only exacerbate the problem, said Frank Mauro of the Fiscal Policy Institute.

"While the governor talks about bringing all stakeholders to the table, he should be sure to invite New York's wealthiest — particularly those benefiting from the resurgence on Wall Street," Mauro said. "It is unfathomable that those who have profited so tremendously from New York's economic growth over the past two decades are not in a position to aid poor and working New Yorkers in this time of need."

According to research from the FPI, an independent, nonpartisan research and education organization, even when accounting for the income tax surcharge, the wealthiest 1 percent of New York households pay about 8 percent of their income in state and local taxes; a family making between $33,000 and $56,000 pays more than 11 percent.

FPI research shows the state should be doing a better job of closing corporate tax loopholes as well.

"At a time when everything is supposed to be on the table, the state cannot afford a tax break for the very wealthy few at the expense of the struggling working people," NYSUT's Pallotta said.