In a new report, a coalition of groups opposing New York’s estate tax offered a full-throated argument in favor of Governor Andrew Cuomo’s plan to lower its rate and raise its exemption threshold from $1 million to the federal level of over $5.34 million over five years.
Empire Center president E.J. McMahon said it was the “purest play … economically” amid a slew of tax cuts Cuomo has proposed in his current budget.
McMahon said roughly 3,600 New Yorkers who were captured by New York’s estate tax in 2012 would be held harmless if Cuomo’s proposal were in full effect. Data show six percent of New York households have over $1 million in non-property assets—retirement accounts, stocks, etc.
Jeff Williams of the state’s Farm Bureau said over 3,000 farms could be hit by New York’s estate tax, and Mike Durant of the National Federation of Independent Businesses estimated some 2,500 businesses were in the same boat.
“The phrase land rich and cash poor epitomizes our farmers,” Williams said at a press conference. “It’s very likely that farmers would have to sell some of that land to pay the tax.”
Currently, New York taxes 16 percent of any estate over $1 million. Cuomo’s proposal would reduce that to ten percent of the value of an estate over the indexed federal exemption threshold in 2019, which could be close to $6 million.
McMahon said New York was an “outlier” in maintaining an estate tax; while many Northeast states have either an estate or inheritance tax, over states including California, Florida and Texas do not.
Left-leaning groups have lambasted the estate tax changes, which they say are a major giveaway to the wealthy that will cost New York sorely needed tax revenue. (Cuomo’s budget assumes a loss of $750 million by the time his changes are fully implemented.)
“Now is not the time to be giving big new taxes to the state’s millionaires and billionaires when so many of our residents are struggling,” said Ron Deutsch, executive director of New Yorkers for Fiscal Fairness.
McMahon said there would be some positive economic impacts as fewer people “move to die,” and that the changes would send a signal to savvy investors and business owners — a Cuomo priority.
“Why would want to do something that gives anybody any added incentive to simply not be in New York?” McMahon said. “All of tax policy is a signaling mechanism to one degree or another. … Doing anything that weakens the signal we’re now sending can only be a net economic positive.”
© 2014, Capital New York
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