New York Governor Andrew Cuomo called for an income-tax overhaul that would place a higher burden on top earners as the third-most-populous U.S. state faces a $3.5 billion budget deficit.
The 53-year-old Democrat unveiled the proposal in an op-ed article he e-mailed today to media outlets, following a similar release yesterday. He didn’t include specific rates in the plan, which described the tax code as unfair and questioned why those who earn $20,000 a year pay the same rate as those who make $20 million.
“New York has left the middle class with an undue burden which also hinders economic recovery,” Cuomo said in the article. “Fairness dictates that the more you make the more you pay and the higher your income the higher your rate.”
Last week, Cuomo said state revenue is “collapsing” amid shrinking Wall Street bonuses and job cuts in the finance industry, which accounted for more than 20 percent of wages paid by state businesses in 2010. New York has projected a $350 million deficit this year and $3.5 billion in the next fiscal year, which begins April 1.
Cuomo’s plan would create multiple brackets with rates increasing on a graduated basis and indexed to inflation, he wrote. Brackets would be added for middle- and high-income earners, and rates would span several percentage points from high to low. Currently, an individual earning more than $20,000 is taxed at 6.85 percent. The state’s lowest rate is 4 percent. A temporary 8.97 percent surcharge for those who earn at least $200,000 will expire Dec. 31.
‘Governor 1 Percent’
Cuomo supports letting the so-called millionaire’s tax lapse, which prompted the Occupy Wall Street protest movement to label him “Governor 1 Percent.” The moniker is a reference to economist Joseph Stiglitz’s research that found 1 percent of the population controls 40 percent of the wealth.
The tax plan Cuomo outlined today could become a key component of a special session agenda if lawmakers and the governor can agree on the details. Senate Republicans, who hold a majority, were told to return to Albany for a conference meeting on Dec. 7, Scott Reif, a spokesman for Majority Leader Dean Skelos, said in an e-mail yesterday. The majority-holding Assembly Democrats were told to come to Albany for a meeting tomorrow, Michael Whyland, a spokesman for Speaker Sheldon Silver, said Dec. 2.
In the op-ed sent to media yesterday, Cuomo said he wants to overhaul the state’s tax system, use public-private partnerships to fix infrastructure and legalize gambling to stimulate the economy.
Cuomo said last month he had discussed with labor unions the possibility of using their private pension funds to invest in infrastructure projects such as building a new Tappen Zee Bridge. The bridge, which spans the Hudson River and connects the lower Hudson Valley region with New York City, could cost as much as $6 billion to replace, Cuomo said.
Legalizing gambling would help “recapture revenue that is currently being lost to other states,” Cuomo wrote yesterday. Indian casinos already operate within New York’s borders and slot machines are allowed at the state’s race tracks.
Neighboring New Jersey already has casinos in Atlantic City. Last month, Massachusetts Governor Deval Patrick signed into law a bill that allows three full-scale casinos to open in the state.
Cuomo first raised the possibility of changing the tax code during two radio interviews last week.
When Senate Republicans meet Dec. 7 they will discuss a “number of issues, including our commitment to cutting taxes,” said Reif, the Skelos spokesman, in an e-mail yesterday. They have a one-vote majority in the Senate.
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.
New York City Mayor Michael Bloomberg said raising taxes isn’t the right way forward, adding that he hadn’t seen the governor’s proposal. The city’s economy generates about 53 percent of New York state tax revenue, including more than 60 percent of income-tax collections, according to the city’s Office of Management and Budget.
“Fundamentally you cannot tax your way out of problems,” Bloomberg said at a news conference in midtown Manhattan today. “You’ve got to get your expenses under control and build the economic base so that if you have tax revenue increases they should come from an expanded economy as opposed to expanded tax rates.”
The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP.