The state Legislature should avoid major tax hikes in New York’s next state budget, including a three-year surcharge on multimillion-dollar incomes proposed by Governor Cuomo, according to testimony presented today by E.J. McMahon, the Empire Center’s senior fellow.

Click here for a copy of McMahon’s prepared testimony.

“Raising taxes on the highest incomes to raise revenues in the short term will only accelerate the erosion of our tax base in the long run, ultimately undermining funding for the very programs the Legislature wants to protect,” McMahon testified. “Even worse, as New York’s economy struggles to recover from the pandemic, enacting any one of the significant ‘millionaire and billionaire’ tax increases now being promoted as a package could turn that erosion into a full-scale landslide.”

McMahon said New York’s tax revenues have recovered more strongly than those of other states—thanks to its reliance on an income tax that, in turn, is disproportionately paid by the state’s highest earners.

“The economies of New York City and State will recover eventually—but how strongly, and how soon, are open questions. In the meantime, the Legislature’s guiding principal can be summed up in five words: don’t push more taxpayers away.”

McMahon’s specific recommendations were:

  • Reject Cuomo’s proposed tax increase. McMahon noted that the latest tax receipts show Cuomo’s budget can be balanced without the revenue the tax hike would generate, not even counting billions in additional temporary federal aid the state is likely to receive under an impending stimulus bill.
  • Postpone scheduled middle-class income tax cuts for up to four years, which will save $2 billion. The cuts are “desirable but not essential at the moment,” McMahon said, recommending that the scheduled tax brackets be annually adjusted for inflation to preserve their value to taxpayers during the period in which the cuts are suspended.
  • Repeal the Film Production Credit. The credit, which functions as an outright subsidy to the entertainment industry, costs $420 million a year, he noted.

In addition, McMahon recommended that the Legislature repeal the sales tax exemption on small clothing and footwear purchases, saving $800 million a year, and devote half of the $800 million in revenue savings to increase in the Empire State Child Credit. This, he said, will “provide larger savings for families with children—the original intended beneficiaries of this overly broad, poorly targeted exemption.”

McMahon said revenue raised by extending the postponement of tax cuts, eliminating the film credit and repealing the small sales tax exemption should be kept in reserve and used “to help finance a transition to a sustainable budget in the longer term” once an expected infusion of federal aid is exhausted over the next few years.

Rebutting claims by advocates of various sweeping proposals for higher taxes on “millionaires and billionaires,” McMahon presented data showing that New York’s income tax code is steeply progressive, relying on the highest-earning 1 percent to generate 44 percent of taxes paid by state residents, and that the New York’s relative share of the nation’s income millionaires has declined since the current “millionaire tax” was first enacted in the depths of the Great Recession in 2009.

The Empire Center, based in Albany, is an independent, not-for-profit, non-partisan think tank dedicated to promoting policies that can make New York a better place to live, work and raise a family.

You may also like

Legislative Spending Unevenly Divided Among Members

Spending by state lawmakers on office personnel and administrative costs varies widely, with some paying out nearly twice as much as others Read More

State of the State Reactions: Will This Bring New Yorkers Back?

The Empire Center for Public Policy offered the following reactions to Governor Hochul’s first State of the State address. Read More

Statement on the release of new COVID-19 Death Toll data

The Cuomo administration left out many people who died without a test during the early weeks of the pandemic Read More

An Open Letter to Lt. Gov. Kathy Hochul

As an organization committed to openness in government, we welcome your commitment to leading a fully transparent administration Read More

Empire Center Appeals COVID FOIL Request Delays

Empire Center has appealed four delayed Freedom of Information Law requests pertaining to state COVID-19 data Read More

Three of 62 Requested COVID Data Sets Made Available through FOIL

Just three COVID data sets have been made fully available in the month since the Empire Center officially submitted 62 FOIL requests Read More

Rec and Restroom Facility Projects Among Fresh DASNY Pork

A total of $87 million in new grants were steered to 174 local projects over the past ten months by Governor Cuomo’s State Dormitory Authority (DASNY) Read More

Empire Center Recognized for Exposing NY Nursing Home Coverup

In recognition of the importance of government transparency, the Empire Center has been selected as a finalist for the for its role in exposing the coverup of thousands of COVID-related deaths among New York’s elderly population. In the thick of the Read More


Sign up to receive updates about Empire Center research, news and events in your email.


Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100

General Inquiries:

Press Inquiries:


The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.

Empire Center Logo Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!