Millionaires' tax talks heat up
STEPHON JOHNSON Amsterdam News Staff | 11/17/2011, 1:10 p.m.
A battle may be brewing between New York's governor and Democrats in the Legislature.
The state's millionaires' tax expires on Dec. 31, but talks about its renewal are just beginning.
Back in 2009, the state of New York added a 7.85 percent surcharge for individuals who earn more than $200,000 and couples who earn over $300,000. Those in favor believe that the millionaires' tax is the best way to raise revenue and believe that society's haves should pay their fair share and help ensure the continued existence of much-needed social programs. Opponents, including Gov. Andrew Cuomo, who has been reluctant to support renewing the tax, believe that the tax drives the rich out of New York State, leaving the state with fewer so-called "job creators."
With rumors growing louder that Cuomo won't recommend an extension of the tax, folks have drawn lines in the sand in preparation for political war. Assemblyman Keith Wright spoke with the AmNews and said he doesn't think the millionaire's tax is a foregone conclusion on one side or the other.
"I think it will always be on the table," said Wright. "My experience tells me that everything is on the table until it is not. Democrats in the Assembly are very concerned about this, but it's way too early in the negotiation process."
According to Wright, negotiations usually start in February, leading up to the beginning of the new fiscal year on July 1.
Reports have New York State's deficit being worse than anticipated. Last year, the deficit was $2.5 billion, and it's projected to be $3.5 billion for the next fiscal year. Wright is a proponent of the tax.
"I'm in favor of the millionaires' tax," said Wright. "It's a remedy that we need to help our economy and to help those in need."
While it's still early for negotiations in New York, that doesn't mean either side is waiting to get things started. One can only look across the Hudson River for what might be in store for New Yorkers over the next six months.
Charles Steindel, the chief economist for New Jersey's Treasury Department, released a study that said high taxes drove out their state's wealthy residents, slowing New Jersey's economic recovery process. According to him, things like estate, income and property taxes are the top reasons why people are leaving the state. Similar arguments have been made by officials in the Empire State as a reason to let the millionaires' tax expire.
Steindel is also the former senior vice president of the Federal Reserve Bank of New York.
"There is a relationship between state tax rates and where people move," Steindel told reporters earlier this week. "The higher tax rate states generally lose more people every year."
However, New Jersey has already eliminated its own millionaires' tax. And while New Jersey Gov. Chris Christie is a Republican, those who don't pay attention to politics in New York might assume that a Democrat would simply extend the millionaires' tax, but with just over a month left before its expiration date, there's genuine worry among progressives that Cuomo won't renew the tax.
Wright isn't surprised. He said people are too hung up on party affiliation and forget these are individuals making decisions.
"Whoever ascends to the governor's mansion or Gracie Mansion, they have their own thoughts on how to get constituents out of a crisis. No Democrat or Republican thinks alike. Who would've thought George Pataki would spend so much in his last term?"