The state must impose greater taxes on New York’s wealthy residents as officials wait for additional federal coronavirus relief, progressive lawmakers said Tuesday, to help close the state’s anticipated two-year $25 billion-plus budget shortfall due to the COVID-19 pandemic.
For months, Gov. Andrew Cuomo and top state officials have pleaded for federal COVID-19 relief for U.S. states and localities as New York faces a $14.5 billion deficit in state revenue this year and a nearly $30 billion budget hole over the next two years.
The state’s education, healthcare and localities anticipate widespread 20 percent budget cuts without direct federal aid for local governments.
Fiscal Policy Institute Executive Director Ron Deutsch argued Tuesday it doesn’t have to be that way, and said the nonprofit research and education organization has worked with lawmakers for months to establish a fair tax code in New York.
“We’re asking the wealthy to help pay their fair share to help balance the budget,” Deutsch said. “...the likelihood of federal aid materializing seems more and more remote by the day. New York families really need relief, and we really need it now.”
A Hart Research Associates poll found 90 percent of 663 registered New York voters sampled from Aug. 12 to Aug. 18 supported tax hikes for New Yorkers who make an annual salary over $1 million, while 88 percent support increases on incomes over $5 million. Democratic lawmakers and advocates referenced the findings during a press conference Tuesday. About 92 percent of Democrats and 82 percent of surveyed Republicans responded in favor of increased taxes on the wealthy over proposed budget cuts.
Bob Master, assistant to the vice president with Communications Workers of America District 1, said a tax on stock transactions and a robust wealth tax on state billionaires’ income could raise between $20 billion and $25 billion.
“We could be generating billions and billions of dollars to prevent many of these cuts that are being proposed,” Deutsch said. “The governor is calling them delays, but these are cuts. We can generate revenue to mitigate the harmful impact of these cuts.”
New York City is home to 113 billionaires — higher than any other country in the world.
“...that’s not even talking about the thousands and thousands of millionaires,” said Sen. Robert Jackson, D-Manhattan, recounting how lines spanning half-a-mile persist at city food pantries.
Establishments in Chinatown continue to provide 10,000 meals to hungry New Yorkers each day.
“New Yorkers are suffering, and we’re going nowhere,” Jackson said.
Sen. Jen Metzger, D-Middletown, said the state cannot slash funding to hospitals, emergency first responders and schools.
“We just can’t do this — the need has only increased during this pandemic,” she said Tuesday, adding mental health issues and overdoses have tripled statewide since the pandemic began.
Metzger has introduced bills to tax corporate buy-backs, and reviewed her history of advocacy of increasing taxes on corporations and New York’s ultra-wealthy.
“They have to help us shoulder this burden,” Metzger said. “Middle-class working families cannot afford it. ... We cannot ask them to pay for this. We cannot ask our communities to absorb these cuts.”
The survey findings showed minimal difference in supporting taxing the rich based on the region voters reside. About 86 percent of voters in support of the tax proposals live upstate or in New York City’s suburbs. Roughly 83 percent of those surveyed are New York City residents who prefer new taxes on millionaires instead of reducing the state’s education and healthcare or other program spending.
“The Legislature can live to be a bit more aggressive in their revenue raising to help this budget shortfall created by the coronavirus,” Deutsch said. “Now is the time for shared sacrifice, and that includes asking the wealthy to pay a bit more so services are not slashed to close this deficit.”
About 30 percent of the 663 surveyed voters agree lawmakers’ effort to tax the wealthy is pointless, disbelieving the change would solve the state’s budget problems.
State leaders are exploring several options to raise taxes on the wealthy, including raising income taxes for households that make more than $500,000, an added tax on luxury homes or apartments valued over $5 million that are not a family’s primary residence or taxing state billionaires.
Jackson sponsors Senate Bill 7378, which would extend the top state income tax rate to 11.82 percent for taxpayers whose New York taxable income is over $100,000,000 and directs the revenue to foundation aid. Sens. Jamaal Bailey, D-Bronx; Brian Benjamin, D-Harlem; Alessandra Biaggi, D-Bronx; and Leroy Comrie, D-Queens; co-sponsor the legislation, which was referred to the Budget and Revenues Committee in January.
Jackson is ready to return to Albany to vote in favor of reform that raises revenue against New York’s wealthiest residents.
“We must do it and we must raise the pressure on each and every one of the 213 legislators along with the governor to make sure we can survive this pandemic,” Jackson said.
Cuomo has dismissed the call of fellow Democrats to increase taxes on state billionaires or New York’s wealthy, saying mathematically, the fiscal numbers don’t add up to close the state’s budget hole without federal assistance.
“There is no combination of savings of efficiencies of tax increases that could ever come near covering the deficit, and we need the federal government to assist in doing that — period,” Cuomo said Monday.
The governor has also argued such a tax increase would drive top wage earners out of New York, further increasing the burden on other taxpayers.
Jackson said Democrats must secure enough votes for a two-thirds majority to override a potential veto, as Cuomo does not support increasing taxes on the rich.
“When we make that decision to tax the wealthiest New Yorkers, we want to have that super-majority to give it to the governor and the governor will have to, for the betterment of New Yorkers, he would have to sign it into law,” Jackson said. “If not, let it burn his hand and his heart with respects of not representing the people he was elected to represent.”
David Friedfel, the director of state studies with the Citizens Budget Commission, agreed the federal government should fund U.S. states and localities, but that the state should reduce capital spending to minimize impact on cuts to essential services.
“That could be a large part in closing the budget gap,” Friedfel said Tuesday.
New York’s top 1 percent of wage earners pay about 40 percent of the state’s personal income tax, or about $20 billion, Friedfel said. If lawmakers increased taxes on the wealthiest New Yorkers this year, tax filing deadlines would prevent the state from receiving full annual revenue from the change for about two years.
“It would require significant sacrifice in order to close this year’s gap,” Friedfel said, adding the state forecasts an $8 billion-plus budget gap this year, and more than a $17 billion shortfall next year.
New York has the nation’s second-highest combined tax rate at 12.7 percent. California boasts the nation’s combined highest at 13.3 percent. Raising the state’s taxes further could drive the wealthiest New Yorkers across state lines, Friedfel said.
Jackson argued the state’s top 1 percent would not cross state lines, and with more than 8 million city residents, celebrities can more easily hide in the crowd and live a normal life.
“New York is the epicenter of culture, of museums, of artists, of diversity — all the things millionaires and billionaires and working people love about New York City,” Jackson said.
Friedfel reviewed the Citizens Budget Commission’s state budget recommendations the nonpartisan, nonprofit organization released in May. The commission discouraged against broad 20 percent cuts to spending areas such as education, as cuts to the state’s 713 school districts should be targeted to the largest and wealthiest districts.
“If you slash all payments in an equal percentage, you end up hurting the highest-need school districts the most,” Friedfel said. “It’s really an unfair way to do it. They would have been much better to target those cuts to those districts that can absorb them best.”
The state has about $3.5 billion in a “rainy day” reserve fund.
“Generally, we have advocated the state should have more reserves and more put away in the past, but now, it’s raining,” Friedfel said.
Officials have not used the reserve money for pandemic spending to date.
The Legislature continues to wait for the state Budget Division’s permanent spending reduction plan, which is expected to be released by the end of the month. Lawmakers would have 10 days to review or modify the plan.
“The sooner you make the cuts, the better off it is for everyone,” Friedfel said. “The longer you wait, the deeper those cuts are going to have to be to get the same amount of savings.”
Tribune News Service contributed to this report.