Governor Cuomo and legislative leaders have announced a deal to raise taxes on the rich, and slightly lower taxes for the middle class.
Cuomo, who for months resisted renewing New York’s temporary income tax surcharge on the wealthy, saying it would hurt the state’s competitive edge for business, has now changed his mind.
He says he and legislative leaders have agreed to once again temporarily raise taxes on the rich, with a new higher tax bracket for those making over $2 million dollars a year.
At the same time middle class earners, who make from $40,000 to $300,000 a year, will see their tax brackets lowered slightly, at a graduate rate.
New Yorkers who earn between $300,000 and $2 million dollars a year will see their tax rates go back to the rate they were before the current temporary tax surcharge, which ends at the end of the month.
Cuomo, in a pre recorded video message, says the new system will be more equitable.
“I am proposing a fair tax system for New York based on simple truth,” said Cuomo. “The more you make, the higher the rate you pay.”
At the same time, Cuomo says, he badly needs funds. The combined budget gap is $3.8 billion dollars and growing.
“As a matter of simple math, there is not an intelligent or productive way to close the current gap without generating revenue,” Cuomo admits.
Cuomo and the legislature have essentially guaranteed a 4% increase in next year’s budget for schools and health care.
The governor blamed the inability of Congress to act on tax policy, and the worsening national economy for causing him to change his mind on tax policy.
“The economy is not going to get better on it’s own, and Washington is not coming to the rescue,” Cuomo said.
Assembly Speaker Sheldon Silver, who has been a long time supporter of raising taxes on the wealthy, says he’s pleased with the agreement.
“This package, hopefully will help stimulate our economy, and help us keep commitments we’ve made to education and health care ,” said Silver.
The speaker presented the tax code changes to his Democratic conference. Senate Republicans were due to hold a closed door meeting on the proposal on Wednesday.
Ron Deutsch, with the pro tax the rich coalition New Yorkers for Fiscal Fairness, says the tax changes are a partial victory, but he says they will generate less than half the revenue then had the current temporary tax surcharge been simply renewed at the end of the year.
“Certainly, it’s a sea change from where we were just a week ago,” said Deutsch. “In reality this doesn’t generate the type of revenue that we need to address the major problems that we’re facing.”
The package also includes an agreement to expand gambling in New York through a constitutional amendment, a road and bridge repair plan, and $50 million dollars in additional flood relief.