In her state of the city address, City Council Speaker Christine Quinn just proposed a 15 to 26 percent hike in the city’s income-tax rate for mid-six-figure earners and above. Together with a proposed state tax hike, the idea would bring New York City’s top rate to nearly 14.95 percent, two-thirds higher than the top rate in New Jersey!
Quinn proposes a new tax rate of 4.25 percent on households earning between $297,000 and $532,000, a 4.45 percent rate for households earning up to $1.2 million, and a 4.65 percent rate on incomes above that level.
The current rate for all of these earners is 3.68 percent.
In her reasoning, Quinn said that “it’s almost impossible not to notice how unfair the current tax system is,” and that “we have to make New York City less dependent on Wall Street” after snoozing through a “Wall Street-induced” budget “slumber” over the past decade or so.
Of course, Wall Street has already conveniently made the city less dependent on it, by disappearing. You can’t be dependent on a ghost. But Quinn seems to want to try, by taxing people whose incomes from salaries, bonuses, and capital gains have now vanished.
And a punitive, record-high tax rate will discourage new rich people who didn’t work on Wall Street from coming to New York to replace the old.
As for fairness: two years ago, the top 1 percent of local taxpayers paid nearly 48 percent of the city’s personal income taxes (even after adjusting for a temporarily higher tax rate during part of that time). Half a decade previously, this top 1 percent had paid 46 percent of the income taxes. They paid 41 percent a decade ago, and 34 percent two decades ago, according to economist Michael Jacobs at the city’s independent budget office.
In other words, during the boom years, the share of taxes paid by the rich increased dramatically, by any reasonable measure.
The city’s dependence on its wealthiest residents’ volatile income, in fact, is what has gotten us into the multi-billion-dollar deficits we face now.
If you want to cheer up after all of this, here is a nice picture of a dog.