Lower, middle and upper-class will receive tax reductions, multi-millionaires will receive tax hike similar to current “millionaire’s tax”
On Tuesday Governor Andrew M. Cuomo, Senate Majority Leader Dean Skelos and Assembly Speaker Sheldon Silver announced they have reached a proposed three-way agreement on legislative and executive proposals to create jobs and cut taxes for middle class New Yorkers. The agreement includes support for a comprehensive New York Works Agenda that will create thousands of jobs with new investments in New York’s infrastructure, passing a fair tax reform plan that achieves the first major restructuring of the tax code in decades resulting in a tax cut for 4.4 million middle class New Yorkers taxpayers, approving $50 million in additional relief for areas devastated by recent floods, and reducing the MTA payroll tax to provide relief for small businesses. The leaders will now present the agreement to their members for approval.
The Governor and the legislative leaders announced tax code reforms. Under the new rate structure, a total of 4.4 million New Yorkers would receive a tax cut, including a $690 million reduction for middle class taxpayers, and all taxpayers would see a tax reduction or no change compared to their previous tax bill. Brackets would increase with the rate of inflation. The newly implemented top bracket expires in December 31, 2014.
The millionaire’s tax that was set to expire in January, has only been retained for those making over $2 million and is slightly reduced from its current level. The new tax structure would generate $1.9 billion in additional revenue for the state. Any additional unspent funds from this revenue would be held in a new priority reserve fund to be dedicated towards future needs regarding “job creation, local mandate relief, education, health care and mortgage foreclosure protection.”
The new tax bracket structure would be reorganized as follows:
Previous Tax Rate
New Tax Rate
$40,000 to $150,000
$150,000 to $300,000
$300,000 to $2 million
7.85% – 8.97%
Over $2 million
Reducing the MTA Payroll Tax
The governor and the legislative leaders have agreed to reduce the MTA payroll tax on small businesses while maintaining funding for the MTA from other sources. The payroll tax would be eliminated or reduced for 294,900 taxpayers overall. The tax would also be eliminated from an additional 415,000 taxpayers by raising the self-employment income exemption. In addition, private elementary and secondary schools, as well as parochial schools, would be exempt from the tax. The state would compensate the MTA for the $250 million in lost revenue.
Inner City Youth Employment Program and Tax Credit
The governor and the legislative leaders agreed to create an inner-city youth employment program and a $25 million tax credit for employers who hire unemployed youth between 16 and 24 years of age over the first six months of 2012. The program and credit would be available to employers in businesses such as clean energy, healthcare, advanced manufacturing and conservation. Eligible employers would receive up to $3,000 for a six month training period and an additional $1,000 if they retained their workers for an additional six months. Nearly $37 million in funding will be provided to critical jobs programs for inner city youth. This includes $12 million in support grants to youth providers for work readiness training, occupational training, placement or job matching, workplace mentoring and follow up services to increase retention. Participating youths will be provided with up to three monthly stipends of $300 each to cover costs associated with transitioning into the workplace. An additional $25 million will be appropriated for workforce skills training and support programs including digital literacy, basic education and occupational training, summer youth employment, job search and placement, and facilitated child care enrollment.
The leaders expressed support to work with the governor and request support from their respective majorities to put a constitutional amendment up for a vote.
The New York Works Agenda
The governor and the legislative leaders have agreed to a plan creating New York’s first infrastructure fund to inject over $1 billion in job creating investment. The accelerated state funding will leverage $10 billion in direct capital investment to create thousands of direct jobs by rebuilding roads and bridges; parks, dams and flood control projects; upgrading water systems and educational facilities; and investing in energy efficient improvements to commercial and residential buildings. The plan will focus on projects that support regional Economic Development Plans in the transportation, energy, environment and public facilities sectors. The accelerated infrastructure fund investment is within the state’s debt ceiling.
Flood Recovery Grant Program
The governor and the legislative leaders have agreed to establish a $50 million grant program to continue recovery efforts in regions of the State impacted by Hurricane Irene and Tropical Storm Lee. The program includes the following support for communities recovering from the storms:
·$21 million for small businesses, farms, multiple-dwellings and non-profit organizations that sustained direct physical flood-related damage costs not covered by other federal, State or local recovery programs. Grants would be limited to $20,000 and eligible only to companies that are on the Small Business Administration’s list of companies that have sustained damage.
·$9 million for county flood mitigation or flood control projects. The grants for each county would range from $300,000 to $500,000; however, counties could jointly apply. Eligible counties must be included in Federal disaster declarations
·An additional $20 million included in federal disaster declarations distributed on an as needed basis
·Permitting local government to let taxpayers impacted by the storms to pay their property taxes in installments
Reduced Manufacturing Tax Rate
The governor and the leaders agreed to provide a new reduction in the tax provided to corporate manufacturers by lowering their tax rate that would save them $25 million.
Though he broke his promise to allow the millionaire’s tax to expire on everybody – it will still affect some 30,000 multimillionaires annually – most business groups supported the deal.
Said Heather Briccetti, acting president and CEO of the Business Council of New York, “The Business Council commends Governor Cuomo, Senate Majority Leader Skelos and Speaker Silver for coming to a bipartisan agreement that will encourage job creation and economic development, reduce the tax burden on middle-income New Yorkers and small businesses, and assist those communities devastated by Hurricane Irene and Tropical Storm Lee. Additionally, the proposal to reduce the tax rate for corporate manufacturers will help an industry that has experienced a steep decline in employment.
“The three leaders have proven, once again, that they are focused on restoring our state’s fiscal health. Restructuring the current income tax brackets and reducing the MTA payroll tax will help ease the financial burden on hardworking taxpayers and business-owners, which is vital to growing New York’s economy. We will continue to work with the Governor, Senate and Assembly, as well as other pro-business organizations, to encourage investment, create jobs and lower the cost of living in New York State.”
Rockland Democratic Assemblyman Ken Zebrowski said, “Today Governor Cuomo announced a plan which is a great start to moving the economy forward by proposing a tax cut for the middle class, a plan to reduce the job-killing MTA payroll tax for small businesses and an infrastructure plan that will create jobs and repair our crumbling roads, buildings and bridges such as the Tappan Zee Bridge.”
Several officials in Rockland including Republican Frank Borelli and Democrats Ilan Schoenberger, Alex Gromack and Tony Earl had intended to gather with the Working Families party on Wednesday to urge the governor to extend the millionaire’s tax. When the budget deal was announced they cancelled the meeting.
Cuomo has spun the deal as being an example of the kind of compromise that is possible, but that you aren’t likely to see in Washington D.C. at this time. It has been widely speculated that Cuomo is aiming for a 2016 run for president.