CUOMO AND LEGISLATURE WILL MEET IN SPECIAL SESSION TO OVERHAUL TAX RATES

Photo: Ove Overmyer

Albany, N.Y.-- It looks like all this lobbying is finally paying dividends. Gov. Andrew M. Cuomo and legislative leaders on Tuesday announced that they had reached an agreement to raise taxes on New York State’s wealthiest residents as part of a deal to overhaul the tax rates. However, critics would argue that it doesn't go far enough. Considering the dire straits we are in, this is better than no action at all. At best, this effort is like putting a band-aid on a broken leg.

The leaders, seeking simultaneously to make the state’s income tax system more progressive and to increase tax collections during a down economy, announced their agreement as lawmakers began to arrive at the Capitol for an expected special session of the Legislature later this week.

The tentative agreement would not only raise taxes for the wealthy, but also cut taxes for the middle class, by creating four new tax brackets and tax rates. The officials said the tax rate changes would generate $1.9 billion in annual revenue for the state.

“This would be lowest tax rate for middle class families in 58 years,” Mr. Cuomo said in a statement. “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.”

The state’s current income tax rates are relatively flat, taxing any individuals who earn $20,000 or more, as well as couples who earn $40,000 or more and file joint tax returns, at the same 6.85 percent rate.

For the last three years, individuals who earned more than $200,000 a year, and couples who earned more than $300,000, have also been subjected to a tax surcharge called a “millionaires’ tax.”

Under the proposal announced Tuesday, for married couples filing jointly, income from $40,000 to $150,000 would be taxed at 6.45 percent; from $150,000 to $300,000 at 6.65 percent; from $300,000 to $2 million at 6.85 percent, and over $2 million at 8.82 percent.

It is important to realize that changing the tax rates and brackets would allow the state to replace some, but not all, of the revenue to be lost when the so-called millionaires’ tax expires on Dec. 31.

Cuomo has come under increasing pressure from Democrats and labor unions in recent weeks as the sluggish economy weakened the state’s financial picture, widening next year’s projected state budget gap to as much as $3.5 billion, and as the Occupy Wall Street movement directed more attention to the issue of income inequality. We are encouraged by these developments, but we stop short by saying that all is well. In fact, it would be prudent to make these tax changes permament-- this proposed plan would expire at the end of 2013.

We would like to thank anyone and everyone who has contributed to this effort-- however, we are not out of the woods by any stretch of the imagination. Our state still faces huge challenges in the coming budget year. The fight for dignity and respect for the working class rages on.