Senate Republicans today unveiled some new proposed personal income tax (PIT) adjustments that would generate savings for middle-class families.* For a couple with income of $70,000 and two children under 17, the potential annual tax cut from the proposed Family Tax Relief Act would appear to come to roughly $700. The estimated revenue hit of $500 million from these changes would be relatively modest, especially if spread over a few years.


So far, so good. The dependent exemption, after all, hasn’t been touched in 25 years, and those credits were never indexed to inflation.

Unfortunately, the Senate GOP conference also wants to spend a whopping $1.3 billion to revive New York’s School Tax Relief (STAR) property tax rebates — a classic political check-in-the-mailbox waste of money that disappeared, widely unmourned, just three years after its 2006 election-year enactment. STAR rebates would be calculated as a percentage of savings already provided through the main STAR homestead exemption program, and would average $445 per homeowner, and $460 for seniors. The Senate passed a one-house STAR rebate bill last year, too.  (Think of it as a $1.3 billion excuse for avoiding Triborough repeal and other school mandate relief.)

Other PIT cuts benefitting the middle class, enacted with Senate Republican support in December 2011 along with an extension of the temporary “millionaire tax,” are due to expire at the end of 2014.  Compared to current state financial plan projections, allowing the top-bracket increase to expire on schedule while making permanent the cuts benefitting middle-class taxpayers would effectively cost another $690 million, which would be a much better use for a portion of the money the Senate wants to waste on STAR rebates. The rest of the STAR rebate could also be put to more economically beneficial uses — by, for example, further reducing the marginal PIT rate, or eliminating much of the state corporate tax in economically depressed upstate New York.

*  The proposed PIT changes would include a doubling (from $1,000 to $2,020) of the dependent exemption, an increase in the dependent care credit (which can be claimed by people with paid child care expenses), and an expansion of the child credit, including creation of a new $500 per-family child credit on top of an increased $375 credit (up from the current $330) for each child under 17 for qualified families.

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

You may also like

As migrants flow to NY, so does red ink 

The influx of foreign migrants to New York could cost the state $4.5 billion more than expected next year, Governor Hochul today warned.  Read More

The Bill Arrives: NY Faces $9B Budget Gap Next Year 

New York’s outyear budget gaps, the shortfall between planned state expenses and state tax receipts over the next three years, has exploded to more than $36 billion, just-released documents show.  Read More

With Union Support, Lawmakers Roll Back a Nursing Home Reform Law

Nearly half of New York's nursing homes would be effectively exempted from a two-year-old minimum spending law under terms of a rollback passed by state lawmakers this week. Enacted Read More

A Breakthrough for Hospital Pricing Transparency in Albany

The murky world of hospital pricing would be exposed to more sunlight under a bill approved this week by state lawmakers. The legislation calls for the state-run employee health pla Read More

NY school spending again led US, hitting all-time high in 2020-21

Public elementary and secondary school spending in New York rose to $26,571 per pupil in 2020-21, according to the latest Census Bureau data Read More

A Tale of Two Levies

New York school districts are getting record levels of state aid. But how many are using it to cut taxes? Read More

Albany’s Belated Budget Binge 

State lawmakers have begun passing the bills necessary to implement the state budget for the fiscal year that began April 1. Read More

No Need to Rush Now

The passage of a state budget bill should be a thorough, transparent and democratic process that allows for ample public input and discussion. Read More