This week’s hurriedly enacted deal between Governor Cuomo and the Legislature means state income taxes will now return to the pre-2009 level for over 100,000 New Yorkers who have been subject to a temporary “millionaire tax,” even though they earn much less than $1 million. It will also save middle-class New Yorkers a little—$5 to $10 a week or so for a typical family.

Unfortunately, the new law will also extend the top slice of New York’s biggest single income tax increase in 50 years, leaving the state tax burden on wealthier filers at its highest level since 1986.

For at least three more years, the top tax rate will be fixed at 8.82 percent on incomes of $1 million for individuals and $2 million for married couples filing joint returns. This is a hair below the now-expiring temporary top rate of 8.97 percent, but well above the permanent-law rate of 6.85 percent. Only two of New York’s economic peer states—fiscally troubled California and New Jersey—currently impose higher taxes on the wealthy. New York City residents in the newly established top bracket will pay 12.7 percent, the highest rate in the country.

Spun as job-creating “reform,” this was at bottom a raw revenue raiser. The state is extracting $2.6 billion from its top earners, redistributing $690 million to middle-income brackets, and earmarking another $400 million to upstate flood relief, a teen jobs program and a reduction in the special payroll tax created two years ago to subsidize mass transit in the New York region.

That leaves the governor with $1.5 billion to help fill a gap of $3.4 billion in the budget he must present next month. Absolutely nothing in this deal will reduce the unrelenting upward pressure on spending, at the state or local level.

There is, of course, a strong economic argument to be made against raising state and local taxes on footloose economic decision-makers. Mr. Cuomo himself was making that argument until very recently. But it doesn’t require a supply-side perspective to recognize the negative fiscal implications of this move.

The top 1 percent of income earners now pays 43 percent of New York’s state income tax, up from 25 percent in 1994. The state government will now be even more dependent on the highly volatile (and, since 2007, sharply decreased) incomes of a small number of filers who mainly live or work in New York City. In the long run, that will put the state’s finances—and, by extension, those of New York City and the suburbs—on an even more precarious footing.