Gov. Andrew M. Cuomo wants to extend the shelf life of the millionaire’s tax, due to expire at the end of the year. And while the merits of that action are at least debatable, the Assembly’s bid to gouge the rich even more may be risking more than New York can afford.
The Democrats in the Assembly expect the rich and super-rich to pay their fair share – and then some.
Anyone making seven figures or more can hardly expect to be shielded from the tax man, although the unscrupulous may try. But the proposed higher tax rates, including a 10.32 percent rate for a few with taxable income topping $100 million, might have an unintended consequence. The richest residents could give up the convenience of living in New York and move to Florida, or other parts of the country or world where they feel more welcome.
These are not paltry sums at issue. Democrats expect that taxing these individuals will rake in roughly $5.6 billion in additional revenue each year.
The proposal faces strong opposition. Senate Republicans favor tax cuts. They also oppose extending the current millionaire’s tax, which brings in about $4.2 billion a year. Allowing it to expire would blow a hole in the governor’s budget proposal.
Taxing the rich, while politically attractive for some, can be tricky business, given their ability to relocate when the tax burden gets too high. Whether they can afford to pay nearly 10 percent of their income in taxes to New York is beside the point. If they decide they’ve finally had enough and move, the state gets zero percent of their income.
The rich and super-rich could decide that living in New York is worth the additional taxes they would have to pay under the Assembly plan. But there is always the risk that they will see this hike as the last straw.
Assembly Democrats would clearly like to be able to spread those extra billions to some favored recipients rather than encourage localities to do the hard work of re-engineering and cost cutting.
The state imposed a “temporary” surtax after the Great Recession. It should not be looking for new ways to add to New York’s reputation for high taxes.