Democratic state lawmakers in New York are proposing a tax increase on the wealthiest New Yorkers this year in the state budget negotiations, putting them at odds with Gov. Kathy Hochul’s plan that does not seek hikes in the state’s personal income tax rates.
Budget proposals made public on Tuesday by Democrats in the state Senate would increase taxes on New Yorkers who earn more than $5 million a year. Hochul’s $227 billion budget proposal, on the other hand, does not increase the personal income tax rates and moves forward with reductions for middle-income earners.
The Democratic proposals would raise the personal income tax from 10.3% to 10.8% for New Yorkers who earn between $5 million and $25 million a year. The tax rate for people who earn more than $25 million would increase from 10.9% to 11.4%.
New York has seen record increases in direct aid to schools, thanks to previous increases in the personal income tax on rich New Yorkers. The state’s coffers have also been boosted by federal pandemic aid. However, budget gaps are anticipated in the coming years if revenue does not meet expected increases in spending, and a decline in the economy could further dampen New York’s budget outlook in the near future.
Progressives have supported higher taxes on the rich in order to aid lower-income New Yorkers and fund education in the state, arguing that the money can support a broader base of people and boost the economy in the process. However, opponents of increasing taxes have pointed to the potential for rich filers to leave the state for lower tax parts of the country. New York relies on a relatively small number of very wealthy tax filers to make up much of its revenue from the personal income tax.
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