Next a tax wall to keep people from fleeing

NY legislature proposes nearly $7 billion in new taxes on wealthy

New York wants to sock it to Wall Street and the wealthy.

Both houses of the state legislature have proposed budgets that include nearly $7 billion in new and increased taxes on businesses and the rich.

The tax increases come despite a $100 billion avalanche of fresh federal aid to New York, including $12.6 billion directly to state government coffers.

Assembly leaders crowed in a press release Sunday that state lawmakers are proposing a $208.3 billion budget for the next fiscal year. 

Their plan includes a 22.6 percent increase in spending — or $16.9 billion — over last year. That’s more than 10.5 percent higher than what Gov. Andrew Cuomo is proposing.

To help cover the new proposed expenses such as rent for “New Yorkers who do not have access to unemployment, federal stimulus funds and other assistance programs’’ — including illegal immigrants — the pols said they want to raise the nearly $7 billion in new revenue through the taxes.

The proposed new levies include:

• A graduated tax hike on millionaires. The current income tax rate for single filers making more than $1 million and couples earning more than $2 million is 8.82 percent. That rate would rise to 11.85 percent.
  
  There also would be two new brackets: one for taxpayers earning between $5 million and $25 million and another for those making more than $25 million. The former would be taxed at a 10.85 percent rate, while the later would be slammed with 11.85 percent.
  
  The moves would generate an estimated $4.3 billion, the lawmakers said.

• A new capital gains tax of 1 percent on those earning more than $1 million a year, boosting state coffers by about $700 million.

• A new progressive state tax on those with pied-a-terres, mansion town homes — or anything in between — used as a second home in New York City. The new levy would raise a projected $300 million for the state.

• An estate tax boost from 16 percent to 20 percent, raking in another $130 million.

• A new 18 percent “surcharge” on corporate franchises, utilities and insurance companies — which could mean higher bills for customers. That tax would generate $1 billion, the lawmakers said.

• The reinstatement of a minimum business tax on corporate capital, earning another $150 million for the state.

• A recording tax on “mezzanine debt and preferred equity investments,’’ which would add another $171 million to state coffers.

When Congress passed the $1.9 trillion COVID-19 relief package earlier this month, the office of Senate Majority Leader Chuck Schumer (D-NY) crowed that New York’s budget deficit would effectively be wiped out, potentially killing the need for new tax hikes, given all the dough it would receive.

That’s why some economists and business leaders told The Post on Sunday that they are scratching their heads over the state legislature’s proposed budget plans, which are essentially the same in the Assembly and Senate.

“These proposals would raise New York’s top state income tax rate to its highest statutory levels since 1979, when it was 12 percent,’’ said  EJ McMahon, fiscal analyst at the watchdog Empire Center for Public Policy.

“The combined state and city rate for city residents would top out at 15.75 percent, the highest in any state.

“Even if the final budget deal doesn’t include this whopper of a soak-the-rich hike, many in the targeted class could see it as a harbinger of things to come’’ — and flee, taking their money with them, he said.

Kathryn Wylde, CEO of the pro-business nonprofit Partnership for New York City, lamented, “The revenue package put forward by the legislature appears to be the most aggressive we have ever seen.

“The top personal income tax rate may have been slightly higher during the ’70s, but taxpayers back then could deduct their state and local taxes from federal tax liability, so the effective tax burden was lower.

“It is also relevant that during the 1970s, New York lost about 1 million residents and half its Fortune 500 companies. So it should come as no surprise that we are likely to see another exodus in the next few years,’’ she said.

“If these revenue raisers are approved in the final budget, it will be very difficult to attract or retain the talent and private investment that we need for a healthy recovery.”

But liberals in the state were thrilled by the proposed taxation and spending.

“We are heartened that the State legislature is beginning to take steps towards progressive, sustainable revenue streams — a sign of the tireless organizing and advocacy from thousands of grassroots New Yorkers,’’ said the Invest in Our New York Coalition, whose members includes the Democratic Socialists of America, the politiical group behind Bronx Congresswoman Alexandria Ocasio-Cortez, in a statement.

The Working Families Party added in its own statement, “The proposed budgets use a three-pronged approach of simultaneously raising income, corporate, and wealth taxes on the richest New Yorkers.

“Thank you for following the leadership of grassroots organizations across the state.”

A spokesman for Cuomo’s state Division of Budget told The Post in an email, “We are reviewing the Legislature’s proposals. 

“That said, the Governor has made clear that the state — facing $17.5 billion in revenue loss over just two years — needed $15 billion in funding from Washington. We are evaluating the Federal legislation and seeking further federal guidance to better understand how this funding can be used. 

“The federal funding is a one-shot resource and is not recurring, and we will work with the Legislature to identify the best solutions to close the current and out-year budget gaps as we negotiate the budget ahead of the April 1 deadline.”