The view of Cuomo’s tax package depends on whether the millionaire’s tax is in the picture
Governor Andrew Cuomo and the legislative leaders announced a new tax plan that would cut state taxes on most New Yorkers, but raise them (taking out of the equation the soon-to-expire "millionaire's tax" surcharge) on people making more than $2 million.
It makes the tax code more progressive—more "fair," in Cuomo terms—by redistributing the existing tax burden to put more of it on the state's highest earners. And it will net the state about $1.9 billion in revenue, according to the announcement, meaning that next year's budget gap will be considerably smaller than the projected $3.5 billion it would be under the current tax system (again, minus the millionaire's tax).
The package is designed to be broadly popular. Most taxpayers (4.4 million of them, according to the release) are going to pay less.
But of course not everyone will be pleased. There's the press and good-government groups, who will not be happy that the proposal was reached between the Three Men in a Room and released*, fully formed, without any debate or obvious involvement from the party rank and file.
There are the economic-conservative Cuomo boosters, like the New York Post and E.J. McMahon, who see Cuomo's de facto tax hike on the wealthiest New Yorkers—after his pledge not to raise taxes on high earners—as a betrayal.
And then there are liberal advocates of state spending on social programs and education, who will focus on the fact that if this package passes, and the millionaire's tax goes away, the state is going to be taking in less tax revenue overall than it did before Cuomo, leaving an expected $2 billion shortfall that will presumably have to be made up with additional cuts.
Billy Easton, head of the union-backed Alliance for Quality Education, which advocates more state spending on education, told me, "Our big concern is you have a $5 billion whole created by a tax cut, by eliminating the millionaire's tax."
Creating new income brackets to make the existing tax code more progressive is "not enough," he said. "We need to make sure there's enough revenues raised to address the issues in the state."
They're "going for fairness, but we need to get it right," he said. "Fairness" he told me, means more revenue, "but it also means people making $10 million, $20 million, $100 million a year, asking them to do a little more, than people making $1 million."
When asked whether he thought liberal legislators would accept Cuomo's plan or hold out for more revenue, Easton said, "Call me back and ask me that question at four o'clock."
*(thanks, Capitol Confidential)