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Rally supports tax changes Stakeholders want state to spend more

They are sometimes called "the spending lobby," the labor unions and stakeholders who want state government to spend more because it supports their jobs.

Those players rallied Tuesday at a nursing home in West Seneca as the "Fair Share Tax Reform Coalition" -- to push for a higher state income tax on New York's wealthiest residents and draw billions more into the state treasury.

They hope that, with those new billions, state leaders can back off cuts to education, health care and other programs that Gov. David A. Paterson proposed as a way to close the $13 million to $15 billion deficit looming for the next budget year.

The coalition's publicity campaign is already streaming across New York's airwaves.

Paterson does not welcome the tax-the-rich strategy.

"My belief is there is an almost automatic formula for losing population in the state and losing job-creation if you tax the rich," he said Tuesday.

Still, some lawmakers seem willing to go down that road. Assembly Speaker Sheldon Silver, D-Manhattan, said he supports the concept of a "millionaire's tax," which his Assembly Democrats have approved in past years.

The definition of millionaire varies, though.

A group of Senate Democrats introduced legislation that would adopt the very plan proposed by the Fair Share Tax Reform Coalition and deepen the tax bite on filers with incomes exceeding $250,000; it would let the tax bite go deeper than 10 percent on incomes of $1 million or more.

The coalition includes Local 1199 of the Service Employees Interna
tional Union, one of the state's most potent lobbying forces; New York State United Teachers, another heavy hitter; the Communications Workers of America; Coalition for Economic Justice; Working Families Party; and the Western New York Health Care Campaign.

"Modest increases in tax rates for only those New Yorkers making over $250,000 would raise an additional $5 billion of revenue for the state," said Todd Hobler, vice president of 1199 SEIU, during the nursing home rally Tuesday.

"The burden of the state's budget crisis should not fall on the shoulders of those who can least afford it," he said, "but [on] those New Yorkers whose incomes have soared over the last decade."

New York's income tax rate tops out at 6.85 percent for filers with $40,000 of taxable income and above. So individuals and couples with incomes of $40,000 or $400,000 or $4 million are to pay 6.85 percent.

But the rich aren't treated like the working class. For incomes less than $100,000, the state phases in the full 6.85 percent bite on the first $40,000.

Those gradual increases start to slip away for individuals and couples whose incomes have reached $100,000. They are taken away entirely for filers with taxable incomes of $150,000 or more.

The coalition says $6 billion can be generated by taking 8.25 percent from taxable incomes that exceed $250,000; 8.97 percent for those exceeding $500,000; and 10.3 percent from incomes above $1 million, the rate California takes from its millionaires. That's the formula Senate Democrats suggested with their bill Tuesday.

Nearly two-thirds of New York voters support increasing the income tax on those making a quarter-million dollars or more, according to a Siena Research Institute poll taken in December. Almost half of the voters said the money should be used to reduce health care and education cuts.

"Fairness is a pretty subjective term," said Ken Pokalsky, the senior director of government affairs at the Business Council of New York, who argues New York's problem is not that it takes in too little but that it spends too much.

State budget increases over the last five years have exceeded the rate of inflation.

"The top 4 percent of taxpayers in New York pay 55 percent of all personal income taxes," Pokalsky said. "The top 25 percent pay about 96 percent of all personal income taxes in the state. The lowest fifth of the taxpayers, in terms of income, pay no personal income tax and in fact receive a refund under the earned income tax credit."

State leaders in the past have taken more from the wealthy to get through the lean times. From 2003-05, for example, they raised the rate to a high of 7.7 percent on incomes exceeding $500,000.

Paterson said lawmakers have to accept that deep spending cuts are needed. He said he would veto any tax increase designed to simply re-create spending.

"What we're trying to do here is to change, and get rid of the addiction to spending that is just abounding in this Capitol and get ourselves on the road to fiscal discipline," he told reporters Tuesday.

e-mail: mspina@buffnews.com and tprecious@buffnews.com

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