Nov. 30 (Bloomberg) -- Governor Andrew Cuomo is considering restructuring New York’s tax code as he prepares a budget that must close a deficit as large as $3.5 billion after a temporary surcharge on those earning at least $200,000 expires Dec. 31.
Cuomo has said he opposes the state’s so-called millionaire’s tax. With the levy set to expire at year’s end, he’s now discussing a broader rethinking.
“What I’m looking at is what do you do with the tax code and how you use the tax code to stimulate jobs,” the 53-year-old first-term Democrat said on WGDJ in Albany today.
The midyear update to the financial plan revealed a budget deficit that’s expected to widen while revenue from Wall Street slumps amid fears of another global economic meltdown. Comptroller Thomas DiNapoli issued a report in October that said that finance, which accounted for 23.5 percent of wages paid by businesses in New York, is likely to shed 10,000 jobs by the end of 2012.
“Since April, when the budget was passed, he hasn’t had to change what he’s been saying,” said Steve Greenberg, a pollster for Siena College in Loudonville. “As he’s getting closer to having to present a balanced budget, it’s not surprising that his words are changing.”
Josh Vlasto, Cuomo’s spokesman, declined to comment.
Cuomo closed a $10 billion budget gap this year in part by threatening dismissals to get the state’s two biggest unions to agree to furloughs and wage freezes meant to save $450 million.
When asked previously about raising taxes on the wealthy, Cuomo has said doing so would put the state at a competitive disadvantage. Rather than reiterating that, Cuomo today said, “All the focus on the millionaire’s tax is in some ways misplaced. I’m focusing on how do you turn the state’s economy around? How do you balance the budget in that context?”
Cuomo is taking a wider view that will help him push his agenda when the Legislature reconvenes in January, said Gerald Benjamin, a professor of political science at the State University of New York, New Paltz.
“He’s changing the conversation so he credibly keeps his promise that he would let what they call the millionaire’s tax expire, while at the same time not losing his capacity to drive the system,” Benjamin said in a telephone interview.
Changing the tax code may create jobs, said Senator Liz Krueger, a Manhattan Democrat who headed the Select Committee on Budget and Tax Reform from 2009 to 2010. The committee recommended the state end corporate tax breaks, Krueger said in a telephone interview.
‘Even Playing Field’
“It would make for an even playing field for businesses trying to hire people,” Krueger said.
If a Cuomo tax code restructuring includes increases, though, he’ll have to navigate it through a Senate whose Republican majority leadership says it won’t be swayed.
“We support cutting taxes, not raising taxes,” said Scott Reif, a spokesman for Senate Majority Leader Dean Skelos.
The Republicans have a one-vote majority and there are signs Cuomo might maneuver as he did when four Senate Republicans joined Democrats in approving same-sex marriage in June.
After the Flood
In October, Deputy Majority Leader Thomas Libous, a Binghamton Republican, suggested he could be swayed to extend the income-tax surcharge if his flood-ravaged city needs the extra cash.
“I was against it last year and I’m still against it,” he said on WGDJ. “But I’ve got a hurting community, and if my community needs revenue, I’m going to make decisions that are out of the box for me.”
Senator John Bonacic, a Republican representing much of the Catskill region, introduced a bill in March that would raise taxes on those who earn $1 million or more and dedicate the revenue to education and relief for local governments. Bonacic still supports that move, said Jillian Deuel, a spokeswoman.
Assembly Speaker Sheldon Silver, a Manhattan Democrat, introduced a similar bill in May.
“We’re heartened by the governor’s willingness to examine the issue,” said Michael Whyland, a spokesman.
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