Assembly Democrats have again proposed as they did last year a major extension of the “millionaires tax” plus adding new tax brackets in ranges of $1 – $5 million, $5 – $10 million, $10 million to $100 million and another bracket above $100 million. The top rates would be 10.32% for those above $100 million. The rate for those at $1 million to $5 million would be 8.82%.
The current millionaires tax is set to expire at the end of 2017 and will be the key issue in negotiating a new state budget by April 1st. If the tax is not extended, the top tax rate would be 6.85% for all taxpayers with annual incomes of $300,000 and higher – basically a flat tax for those at that income level and higher. The Assembly estimates that the added high income tax brackets would generate an additional $5.6 billion in revenues when fully phased in and effect 66,143 taxpayers.
Governor Cuomo has proposed extending the current tax but Senate Republicans have so far not committed to it though the failure to do so will lead to a major budget deficit of several billion dollars in future years with a loss of $700 million estimated for the last quarter of the coming fiscal year, April 1, 2017 – March 31, 2018. State lawmakers though are also concerned about potential massive federal budget cuts that could be enacted by Republican controlled Congress which could cost the state billions of dollars. One report suggests that the Trump Administration may proposed budget cuts of up to $1 trillion.
Last year, the Legislature approved multi-year middle class tax cuts which are set to take effect on April 1st and eventually lower rates to 5.5% by 2025 for those with incomes between $40,000 and $150,00. This will lead to an additional loss of some revenue. There will be great pressure to extend the millionaires tax in order to avoid deficits and to pay for the popular proposals in the Governor’s budget including a big increase in school aid and free tuition in public colleges.