WHAT JUST HAPPENED TO YOUR NYS TAXES? READ IT HERE

Albany, N.Y.-- New York's second major income tax increase in two years will charge millionaires more, and give 4.4 million middle-class residents a well deserved break worth $200 to $400 a year.

Under the plan backed by Gov. Andrew Cuomo, which the state Senate passed 55-0 late Wednesday night and the Assembly approved 130-8 early Thursday morning, those tax breaks will go to most households with annual earnings of $40,000 to $300,000, or single filers making $20,000 to $150,000 a year.

To pay for it, the state will rely on households making over $2 million or single filers making $1 million to pay higher taxes. Their income tax rate will increase from 6.85 percent to 8.82 percent on Jan. 1.

"This was a function of an economic reality and deteriorating economic conditions," Cuomo said after the Senate vote. He said it should help stimulate jobs with some of the tax cuts and construction spending, while closing about $1.5 billion of a projected $3.5 billion state deficit next year with higher revenues overall.

The tax increase will raise $2 billion to pay for the middle-class tax break, a break in the New York City transit tax for small businesses, a public-private infrastructure repair fund, a tax break for manufacturers, and $50 million in aid to upstate communities trying to recover from historic flooding in the late summer. The funding is also expected to avoid another year of cuts to education and health care.

Meanwhile, households making $300,000 to $2 million -- or single filers making $150,000 to $1 million a year -- will pay the same 6.85 percent rate they would have paid come Jan. 1, when a temporary tax surcharge expires.

The three-year package agreed to by Cuomo and legislative leaders provides a new tax structure that continues to focus on the disparity between New York's rich and poor. A 2009 bill at the beginning of the state's fiscal crisis created a temporary surcharge that increased the income tax rates for New Yorkers making $200,000, hitting millionaires with the highest rate just 0.15 of 1 percentage more than the new rate approved by Cuomo, Skelos and Assembly Speaker Sheldon Silver.

NYS Assembly Leader Silver exiting the
Legislative Chamber on Dec. 6, 2011.
photo provided

For over a year, Silver has pushed for a millionaire tax. But he was strongly opposed by Skelos who said it conflicted with basic Republican values, and by Cuomo who promised in his campaign to freeze taxes in what he called one of the most heavily taxes states in the country.

"I think we were able to put together a good package and showed that government in New York is functioning, that we are different from what is happening in Washington," Silver said. "We are facing the same economic climate and we are trying to do something about it ... and we will not be faced with the severity of cuts that we would otherwise be faced with next year. We're putting fairness and equity into our tax code."

Until last week, a millionaire tax was officially dead in Albany, according to both Cuomo, Skelos and most labor officials. It's almost "shocking" to most insiders that something like this tax reform package could pass so quickly and with so little theatrics-- Albany insiders also say it would of never happened under previous administrations.

But in the last few days, Cuomo instead led the Legislature toward Silver's top priority. Cuomo made the case that the world and national economies continued to be unstable, while weak revenues created an unexpected $350 million deficit this year and a projected $3.5 billion deficit for 2012-13.

"While I am against higher taxes and I believe our long-term economic future for this state is enhanced by in fact lowering taxes to make us more competitive ... If I were to close the entire gap by budget cuts it would decimate essential services doing real harm to the state's economy and strangling local governments all across this state," Cuomo told reporters.

Some critics of the tax reform, like the OccupyAlbany group, say the bill didn't go far enough. While taxes may decrease for some in the middle-class, the overall impact leaves a 3 billion dollar bump up for the wealthy when you figure in the millionaire's tax expiring on December 31.

One AlbanyOccupier tweeted, "Is that really fair taxation?" Other progressive groups suggest that besides adjusting personal income tax rates, more could be done to fix corporate tax loopholes and create higher tax brackets for the super-rich to create more revenue in a down economy.