A long-awaited tax proposal from Democrats in the New York state Assembly would increase taxes on millionaires while giving tax relief to middle-class and low-income workers, a shift they said would raise $1.2 billion in new revenue while making the state income tax more equitable.
The plan, which Speaker Carl Heastie outlined for The Associated Press on Monday, is likely to run into significant opposition in the Republican-led Senate but will give Democratic lawmakers leverage as they negotiate the state budget over the new few months.
Under the proposal, the state’s current top income tax rate of 8.82 percent would be applied to anyone making between $1 million and $5 million a year. Two new, higher rates would be created for higher brackets: 9.32 percent for those making between $5 million and $10 million and 9.82 percent on more than $10 million.
The hikes would raise an estimated $1.7 billion. About 56,000 taxpayers would pay more, with the average increase projected to be $33,000. Heastie noted that some 10,000 of those people are non-residents.
“It’s a fair way to ask people to pay their fair share,” said Heastie, a Bronx Democrat. “Someone making $5 million or $10 million a year, that’s a small sacrifice.”
The proposal would reduce tax rates for middle class taxpayers who make between $40,000 and $150,000 from 6.45 percent to 6.25 percent.
Some 5.5 million taxpayers would see their liability reduced, saving on average $50.
Finally, about 1.6 million low-income workers would see an increase in the earned-income tax credit, with the average recipient receiving nearly $110 more.
The tax relief for the middle class and low-income workers is expected to cost about $450 million.
The changes, if approved, would go into effect in the 2018 tax year.
The proposal, which was expected to be formally introduced this week, is likely to come up at a budget hearing Tuesday dedicated to the state’s tax code. While they might entertain some of Heastie’s proposed tax cuts, Republicans are already on record opposing higher taxes on any tax bracket.
“The wealthy pay a very significant portion of taxes in this state already,” Senate Leader John Flanagan, a Long Island Republican, said last month, noting that many low-income New Yorkers already pay no taxes. “I think what we should be talking about is job development, economic development. That will trump everything.”