New York State’s tax receipts in January totaled $11.4 billion—outperforming Governor Cuomo’s projections for the month by $1.7 billion, or 17 percent, according to the monthly cash report issued late today by state Comptroller Thomas DiNapoli.
The increase was paced by receipts from the personal income tax (PIT), New York’s largest revenue source, which historically have been higher in January than any month other than April. Last month’s PIT collections came in at $9.44 billion—a net $553 million above the January 2020 figure, and $1.4 billion higher than what Cuomo projected in his FY 2022 Executive Budget Financial Plan, unveiled last month.
The PIT surge was concentrated in the quarterly estimated payments of higher-earning business owners and investors, which were up nearly $1 billion from a year earlier. Paycheck withholding payments, reflecting the earnings of most employed New Yorkers, were down $419 million, or 8 percent, from January 2020.
Consumption and use taxes, including the state sales tax, were $100 million below the January 2020 level but still exceeded Cuomo’s most recent projection by $38 million.
At this pace, assuming Cuomo’s projections for February and March remain correct, net PIT receipts for the entire pandemic-clobbered 2021 fiscal year will be down just $748 million, or 1.4 percent, from the FY 2020 level, even though much of the state’s economy remains at least semi-dark and private sector employment at the end of last year was almost 1 million jobs lower than a year earlier. The uptick in estimated payments, in particular, no doubt reflects in large part the stock market recovery since the crash of last March, and its impact on the capital gains and dividends income of the wealthiest state residents.
If the added tax collections stand up in what’s left of this fiscal year and are assumed to be baked into the base for FY 2022, they will be more in line with—and slightly exceed—DiNapoli’s updated projection in November.
Higher tax collections at the latest pace also would eliminate the need for Cuomo’s proposed $1.5 billion in PIT surcharges on multi-millionaire earners, included in his budget on the assumption that the state receives at least $6 billion in unrestricted aid from President Biden’s stimulus bill, now working its way through Congress. The initial draft of the bill produced by the Democratic majority in the House of Representatives would yield $50 billion in aid to New York’s state and local governments, including nearly $10 billion for K-12 schools and $12.7 billion in unrestricted aid to the state government alone.
The latest tax numbers further undermine Cuomo’s repeated demands for a whopping $15 billion in additional unrestricted federal aid—which he has variously described as the size of the state’s post-pandemic budget gap (which has largely disappeared) and the amount of added federal taxes paid by New Yorkers due to the state and local tax (SALT) deduction cap imposed in 2017 (although the law as a whole actually reduced federal taxes in New York).
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