ALBANY – Democratic Assembly leaders are pitching a plan to hike taxes on wealthy New Yorkers while offering modest tax breaks for middle class residents.
Upset that Gov. Andrew M. Cuomo’s budget does not spend enough in light of rising revenues, Assembly Democrats are pressing the tax hike plan as a way to provide more than $1 billion in additional money that could be spent in the budget beginning in 2018.
Speaker Carl Heastie called the Assembly plan an effort to create a “fair and progressive tax structure” in New York.
The proposal calls for applying the state’s current top tax rate – 8.82 percent – to those making between $1 million and $5 million a year, while raising the rate for those earning between $5 million and $10 million to 9.32 percent. For those making over $10 million annually, the rate would be 9.82 percent.
The tax increase would raise $1.7 billion for the state, costing an estimated 56,000 wealthy taxpayers an average of $33,000 apiece.
The idea faces a steep uphill climb in the Republican-led State Senate, particularly in an election year for legislators and in a year where the state budget is not facing a deficit.
The proposal was introduced as a new bill on Monday evening, sponsored by Assembly Ways and Means Chairman Herman Farrell, a Manhattan Democrat.
About 5 million middle income New Yorkers would get a tax break, averaging about $50 apiece by reducing. The Assembly Democratic plan seeks to lower the tax rate from 6.4 percent to 6.25 percent for those making between $40,000 and $150,000 a year. That will cost the state about $260 million in lost revenues.
Finally, the Democratic proposal calls for increasing the earned-income tax credit available to low-income workers from an average of about $640 now to $750 per year. That plan would cost the state about $190 million.
Overall, when the higher tax receipts and tax breaks are factored in, the Assembly plan represents a net gain for the state of $1.2 billion in additional tax receipts.
The Heastie tax plan was dismissed by State Senate Majority Leader John Flanagan, a Suffolk County Republican. “Whether it’s income taxes, property taxes, business taxes, user fees or tolls, we don’t support raising taxes or asking hardworking New Yorkers to dig deeper into their pockets to pay for more,” Flanagan said in a statement Tuesday afternoon.
As it sought to put the tax hike on wealthy residents onto the state budget negotiating table, the Assembly Democrats were planning later Tuesday to pass – for the fifth time – legislation to provide paid family leave benefits. The passage comes after Cuomo recently joined the longtime Assembly Democratic effort with a family leave plan of his own. The Assembly program, though, would provide far larger weekly pay benefits to workers who take leave from a job; it would be funded via state disability account from employee payroll deductions, and includes calls to give workers two-thirds of their average weekly pay level, double the amount Cuomo has proposed for the start of his plan.
Assemblywoman Catherine Nolan, a Queens Democrat and the bill’s sponsor, said the measure “is a creative and innovative way to deal with a really pressing need that the people in our state have, and that need is the ability to go back to the job they love” after up to 12 weeks off to care for a sick family member or a new baby.
Asked about business concerns over such issue as costs associated with replacing workers out on leave, Heastie said, “They need to have a heart. This is a humane thing to do.”