Tax Cut for 4.4M New Yorkers, Tax Hike for 32,000 Millionaires
MANHATTAN — Gov. Andrew Cuomo announced a major agreement Tuesday that would cut taxes for 4.4 million middle class New Yorkers, while creating a new tax bracket that would raise taxes on the highest-income earners.
The tentative deal, forged with Senate Majority Leader Dean Skelos and Assembly Speaker Sheldon Silver, paves the way for comprehensive tax reform across the state — the first major overhaul in decades.
Under the proposed tax plan, which is expected to generate an additional $1.9 billion in revenue per year, middle class taxpayers earning between $40,000 and $300,000 a year would see their taxes drop.
But 32,000 New Yorkers making more than $2 million would see their tax rate increase to 8.82 percent — less than they pay today but more than they would have if the so-called “millionaire’s tax” had expired at the end of 2011, as it was scheduled to before the deal.
"This job-creating economic plan defies the political gridlock that has paralyzed Washington and shows that we can make government work for the people of this State once again,” Cuomo said in a statement, noting that the change would create the state’s lowest tax rate in 58 years for middle class families.
Cuomo had argued during his campaign and throughout his first term in office that burdensome tax rates were driving New Yorkers and businesses out of the state and had repeatedly resisted the idea of extending the millionnaire's tax, which applies to families making more than $300,000.
But faced with a growing budget hole and continued pressure from Democrats fueled by Occupy Wall Street, the governor appears to have come to a compromise that technically lowers taxes from today's rates, and marks another legislative victory for the governor, who can now add a tax reform agreement as another notch in his first-year belt.
In addition to the tax plan, the deal announced Tuesday includes an extensive $1 billion “New York Works Agenda" designed to create jobs through infrastructure spending on projects such as roads, bridges, parks, dams and water systems. It also lays out $35 million in new tax credits to companies that hire inner-city kids and includes a plan to expand gaming though the state.
The works projects would be funded through $700 million in state capital investments as well as $300 million from the Port Authority for infrastructure projects in the city, according to a joint release.
The agreement also reduces controversial Metropolitan Transit Authority payroll taxes across the board in an effort to provide relief for small businesses. The state intends to reimburse the authority for the lost revenue, according to the plan, which earned praise from the city’s teacher union, the MTA and others on Tuesday afternoon.
"The agreement worked out among the governor, Speaker Silver and Majority Leader Skelos — a stark contrast with the political deadlock in Washington — will bring more fairness to the state tax code and help ensure that children in our public schools will begin to see restorations from the devastating education cuts of recent years," he said.
City Council Speaker Christine Quinn praised the plan as “fair” and said it “put the needs of the people first."
"With Gov. Cuomo's leadership, we have forged a bipartisan plan that is fair to all New Yorkers and will help build a brighter economic future for this State," Silver said in a statement.
Assembly members were already meeting on the plan Tuesday afternoon, while the Senate was expected to begin deliberations Wednesday.
“I am looking forward to presenting this framework agreement to the members of our conference tomorrow and hearing their feedback,” Skelos said.