After long opposing the extension of a tax on millionaires supported by 72 percent of New Yorkers, Democratic Governor Andrew Cuomo partially reversed himself and proposed a plan that would raise more revenue from the very wealthy and make the state’s tax system less regressive.
On Wednesday and Thursday, the New York Senate and General Assembly approved Cuomo’s plan to raise taxes on joint filers making more than $2 million, while cutting them for those making under $300,000.
The move by Cuomo represented a stunning reversal of his pledge to oppose any tax increases, which he backed up in March by effectively killing the extension of New York’s popular millionaire’s surcharge.
For his part, Cuomo explains his reversal by noting that the state faces a $3.5 billion deficit and that as a result “there is not an intelligent or productive way to close the current gap without generating revenue.” The new tax plan will raise $1.9 billion, of which $1.5 billion is slated to go directly to deficit reduction.
Cuomo’s decision also comes after months of increasing pressure to extend the temporary millionaires’ tax from the New York Democratic Party establishment, Occupy Wall Street protestors, and overwhelming majorities of New Yorkers generally.
Compared to the tax rates that would be in effect if New York simply allowed the millionaires’ surcharge to expire, the tax deal reduces taxes for joint filers making under $300,000, keeps them the same for joint filers making between $300,000 and $2 million dollars, and increases the rate by almost 2 percent on joint filers making more than $2 million dollars. However, supporters of the millionaires’ surcharge point out that a straight extension of that provision would have raised more than twice as much revenue from the wealthy.
In any case, Cuomo’s tax plan should be applauded and will definitely benefit a wide-swath of New Yorkers. We only wish that anti-tax New Jersey Governor Chris Christie would follow suit and reinstate a millionaires’ tax in his state.
Photo of Governor Andrew Cuomo via Gov Andrew Cuomo Creative Commons Attribution License 2.0