Readers responding to this week’s RBJ Daily Report Snap Poll were narrowly divided on whether New York’s so-called “millionaires’ tax” should be allowed to expire this year.
Slightly more than half of respondents think the tax surtax should continue, but some of those favor even higher rates for tax filers earning $5 million or more.
When Gov. Andrew Cuomo visited Rochester a few weeks ago to promote his new budget plan, he said the focus of debate in Albany likely would be a three-year extension of the millionaires’ tax, which is slated to expire Dec. 31, dropping the personal income tax rate for wealthy New Yorkers to 6.85 percent from 8.82 percent.
“If that happened, the cost to the state would be $3.5 billion,” Cuomo said. “It would decimate the budget.”
The current tax surtax on wealthy filers was enacted in 2009 and revised in 2011. For 2016, single filers earning $1,070,350 or more pay the top rate; for married couples filing jointly, the income threshold for the top rate is $2,140,900.
Cuomo and other supporters of the millionaires’ tax say the money it generates is needed to help pay for budget priorities such as education aid and a middle-class tax cut. Opponents argue it drives wealthy residents from the state and hurts owners of small firms who report their business income on their personal income tax returns.
According to the most recent Internal Revenue Service data, New York in 2014 had 47,440 tax filers earning $1 million or more, up from 35,802 in 2010, the first full year of the economic recovery. That 32.5 percent increase compares with a 45.3 percent increase nationwide over the same period.
Meanwhile, Assembly Speaker Carl Heastie and Assemblyman Herman Farrell, chairman of the Ways and Means Committee, have proposed new brackets for those earning $5 million or more. The top rate, for filers earning more than $100 million, would be 10.32 percent. Heastie and Farrell say the new tax structure would generate $5.6 billion in additional revenue compared with the current tax law and would affect some 66,000 taxpayers.
Roughly 665 readers participated in this week’s Snap Poll, which was conducted Feb. 13 and 14.
What is your view on New York’s millionaires’ tax, which is slated to expire at the end of 2017?
It should be extended for three years: 18%
It should be made permanent,with new higher rates for filers earning more than $5 million: 33%
Never a mention of lowering expenses. If our government thinks there is an inexhaustible supply of money coming from the wealthy, there will soon be fewer and fewer wealthy from which we feed the addiction of spending.
—Larry Kessler, CEO, the Kessler Group Inc.
The “millionaires’ tax” is so shortsighted. It has already forced a number of high-profile people to change their residency to more tax-friendly states. Not only does NYS lose out on the tax revenue from those individuals, more importantly, the state loses those people as both job creators and as philanthropists. A wiser tax policy would be to limit NYS income tax to say the first $10 million of income, thereby effectively lowering the tax rate for the super-wealthy—the people that the state should be trying to attract. NYS has a number of tax-incentive programs to attract businesses to NY. I would argue that those dollars would be better spent in attracting successful individuals to NY. Speaker Heastie’s proposal would be the surest way to hasten the relocation of the state’s wealthiest people to the detriment of its remaining citizens.
—Mark Redding, president, Poseidon Systems
A good way to reduce the taxes NY collects is to keep the millionaires’ tax in place, along with the high income tax. When the NY residents who have been very successful move out of the state, they will pay nothing! The state will lose tax revenue and very good residents and maybe even their business, which could move out of state as well.
—Gerry Van Strydonck
If I was making that kind of money, $5 million or $100 million, I’d pack up and leave NY. So for those who do make it, how could I blame them for leaving? We are losing population in this state from all income brackets. We need a change at the top, but with the bulk of voters down state I don’t see any changes coming internally. Maybe, just maybe the entire country’s economy could get rolling with better employment opportunities for more able-bodied people to earn a better living, thus paying into the system instead of being dependent on it.
Punishing success will not solve the problem of government overreach, spending and corruption. Simply, the state spends more than it should in areas that should not be the concern of governance.
We need a tax plan that is fair to everyone. Cuomo needs to reduce unnecessary costs in this state and stop being a Santa Claus to businesses by providing a tax-free plan for them to operate under for up to 10 years. Those same companies use many of the state’s resources as much or more (than) anyone else. Start eliminating wasteful state spending and put all that money to work repairing or replacing our infrastructure. Things like putting up all those new signs on our interstate highways advertising NYS or alerting people to text stops. Does anyone believe they provide any revenue in this state? The next best thing to happen in our state is vote in a new governor. This one does not understand how to spend money.
The wealthy find ways to avoid taxes or just leave New York (like Tom Golisano, whose departure has meant about $5 million less in state revenue per year). The high tax rates do hurt the growth of small businesses. NY’s tax brackets need a total overhaul. There are 13 brackets now, and the rates go up, then down, then up, then down, then up to 49.02 percent, then down to 9.62 percent. While I would prefer a flat tax, if they are going to be progressive, they should be progressively up, with the final bracket as low as possible.
—Karen Zilora, president, Creative Scanning Solutions Inc.
The exodus has already begun. Soon, all who will be remaining in New York will be those on welfare and those employed to cater to them. Cuomo has been very eloquent in the past about who he believes are welcome in New York and who are unwelcome. This is another example. If we had our own state we could do something to correct this.
New York should beware the “David Tepper” effect (the New Jersey hedge fund billionaire who moved to Florida). Extending the existing tax structure is fine, but increasing the top rate will surely drive more tax dollars from New York to Connecticut or Florida. Since New York doesn’t seem to be able to control the cost side of the budget, this will serve only to increase the taxes on those of us who remain. Which will cause more people who can to flee, and so on.
I am about a million dollars short of being a millionaire so it is easy for me to say extend it, make it permanent, raise it, etc., but the state does have to determine if this is a rational way to create revenue. If residents with a lot of disposable income leave NY due to what they consider unreasonable taxes, that will decimate the budget more than lowering the rate. NY should work on ways to retain and attract wealth and job creators who want to expand and hire in the state, instead of giving them more reasons to develop an exit strategy.
Sure, soak the rich (sarcastically), it really is just hype and nonsense since the super-rich create tax-exempt foundations, offshore havens and hire creative accountants and lawyers to shelter income. Meanwhile the rest of us working in NY get sapped to support the state. In NY, the (single) marginal income tax rate is 4.5 percent at $8,450 and 5.25 percent at 11,650, then 5.9 percent at $13,850 and more steps until 6.85 percent at $214,000. The millionaires’ tax is at 8.82 percent at $1,070,350. So anyone working full-time pays at least 5 percent of income … and it moves up to 8 percent. So my question is, "Where does it all go?"
—Dave Giambattista, Fairport
The millionaires’ tax only drives people out of the state who can afford and do pay most of the income taxes in New York. The only purpose of the tax was to garner votes of the dependent class for the Socialist party that controls New York State. The result of course simply drove the wealthy entrepreneurial class out of the state, making New York less competitive and continuing on its downward economic spiral.
—Jim Weisbeck, Bloomfield
Whatever perceived damage it would do has been done while the good things that government does need to be paid for.
Let me guess, another “temporary” tax that will become permanent. Just like Thruway tolls, which we were going to end when the Thruway construction loan was paid off 30 years ago, etc. etc. (Gasoline taxes are supposed to pay for road maintenance, right?) These are reasons why NY is dying and its population is shrinking. New York is a beautiful state. Lots of people would love it here! We need smart elected officials at the state level running things. Cutting costs, red tape, lowering taxes and attracting jobs. That in turn would generate more tax revenue from new payroll, sales and all the other taxes. But unfortunately we have terrible leadership. And onerous regulations, a bloated bureaucracy, an extremely expensive public employee pension system. A losing hand indeed.
—George Thomas, Ogden
The millionaires’ tax could be lowered if those top earners demonstrated creation of year-over- year incremental job creation or year-over-year increment contributions to the public schools. A portion of wealth earned in our society must be reinvested in the support of our state. That investment should be incremental year to year. In other words, new jobs and new education initiatives.
—Wayne Donner, Rush
Take this obscene tax away, it’s only going to chase successful people away so the tax base shrinks even more. Hey, Cuomo, what’s 100 percent of nothing? Isn’t the purpose to attract people to our state? How does that work? I wonder how many will leave or change residency? Keep the taxes high so no one can afford them. Where’s the logic in that?
Great way to get millionaires to leave New York, thus having those of us that are not millionaires to pay more.
The “trickle-down” theory has already been disproved. Helping wealthy individuals to save money does not create jobs or increase spending. Keep the tax.
—D. Wyman, Penfield
Time to embrace a growing economy. Stop stifling the economy with extra taxes.
—John Sackett, Byron
Keep the tax and lose the millionaires.
This tax does drive small businesses and the wealthy to move out of the state. This additional tax and all the other taxes in NY make it very unfriendly to do business in NY. It would be interesting to evaluate the lost tax revenue (from people moving out of NY) compared to the additional tax rate. Is it a net gain or loss? The law should provide exemptions in the situation that a business owner sells his business after working 30 years.
As Margaret Thatcher once pointed out, "the problem with socialism is you eventually run out of other people’s money." Will there be any millionaires left in New York with more and more taxes for every whim of the governor?
—Al Kempf, Fairport
The highest earners are typically job producers. There are always exceptions, but if Gov. Cuomo and the Democrats want to continue to drive these valuable contributors to society out of New York State, they should renew the tax and keep increasing it. The governor already deemed social conservatives unacceptable and declared that they have no place here. New York already boasts the most people leaving every year. If that’s what he wants, which seems to be the case with some of these policies, it sure is working.
NYS government does not have a taxing problem, it has a spending problem. Over the last six years, NYS population growth is in the bottom third of states per Wikipedia. Two neighboring states (Pennsylvania, 3.07 percent, and Massachusetts, 5.1 percent, per taxfoundation.org) have a flat income tax that is lower than NYS (except if you make less than $11,650/year). As technology makes it easier to work from any location, we may see more college graduates elect to settle into low-tax states. Seven states have no income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming.
2/17/2017 (c) 2017 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email [email protected].
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