New York State's so-called millionaire tax, temporarily raising the state's top income tax rate to 8.82 percent from the permanent law limit of 6.85 percent, is next scheduled to expire at the end of 2019. The added tax generates roughly $4.5 billion a year, about 9 percent of net personal income tax revenues, making New York more dependent than ever on the highest-earning one percent of its taxpayers.
The future of the tax has now emerged as an issue in the gubernatorial campaign.
Cuomo has further boosted the state’s already heavy reliance on taxes paid by income millionaires. This has made Albany’s revenue base more fragile and volatile — a problem aggravated by the new federal cap on state and local tax deductions, which effectively raises total tax rates for New York’s highest earners.
E.J. McMahon, research director at the Empire Center for Public Policy, a conservative-leaning think tank, stated that the tax conformity issues raised by the federal law would be the primary focus of New York tax policy in most years. However, the state and local tax deduction (SALT deduction) issue, and the related proposals to shift the state’s reliance away from the personal income tax, has drawn the lion’s share of attention.
Any savings in New York, particularly in the New York City suburbs with high taxes, would be negligible compared with what other states may see, said E.J. McMahon, president of the Empire Center, a fiscally conservative group in Albany.
"This much is clear: A couple falling well within the middle class by downstate standards — people, in most cases, living paycheck-to-paycheck in modest suburban homes — will realize much smaller savings than their counterparts in lower-cost, lower-taxed states across the country," he wrote.
New York State has long been home to a large share of the nation’s wealthiest households. But since the Great Recession ended, the Empire State has fallen behind when it comes to gaining additional income millionaires
Seemingly stalled on health care and Medicaid, congressional Republicans and the Trump administration will soon turn their attention to taxes—another area in which federal reform offers mixed prospects for New York State.
Gov. Cuomo says Democrats lost the presidential race last November because they ignored middle-class voters. His answer? Don’t ignore them — lie to them.
If you’re not a millionaire, you might think Gov. Andrew Cuomo’s millionaire tax surcharge won’t hurt you. Think again.