Empire Center for
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November 27, 2013
Over the past few days, Governor Cuomo has made it clearer than ever that his “tax cut” focus next year will be on something that can be more accurately described as a tax shift: the creation of a new property tax “circuit breaker” credit that homeowners could claim on their state income taxes. The credit would rebate a portion of local property taxes, to the extent that they exceed some set percentage of each homeowner’s income. (For an example, see this Assembly bill.)
Cuomo also made it clear that he doesn’t want to touch the state’s largest revenue source–the personal income tax, or PIT– because, he said on the Capitol Pressroom radio show, “we just did the PIT last year … in the budget.” In fact, what Cuomo and the Legislature “just did” with the income tax in the 2013-14 state budget was to temporarily extend, for three more years, a 29 percent tax hike on individuals earning more than $1 million and couples earning more than $2 million, which was previously due to expire at the end of 2014.
November 14, 2013
The report of Governor Cuomo’s Tax Reform and Fairness Commission is a useful, well researched collection of interesting and provocative ideas — some much better than others. Not a bad place to start a further exchange of ideas leading to a fruitful debate on the topic, assuming such a thing is possible in Albany. (One can always dream.)
For example, the report is very good on the subject of how to “modernize” (i.e., broaden) the sales tax base. But takes a wrong turn in recommending what ought to be done with the money raised by these changes.
October 16, 2013
Mayoral candidate Bill de Blasio’s “big, bold” proposal to hike the marginal income tax rate in New York City has smoked out Governor Andrew Cuomo’s now-you-see-it, now-you-don’t supply side.
From today’s Daily News:
Cuomo, during a meeting with the Daily News Editorial Board, said he is looking to cut taxes next year — not raise them — arguing it’s important that the “arrow is pointed down.”
April 24, 2013
New York’s rate of growth in withholding tax receipts during the final quarter of 2012 was among the lowest for any state with an income tax, according to the latest quarterly State Revenue Report from the Rockefeller Institute of Government. ***See Update at bottom of post.***
Withholding taxes are driven mainly by changes in employment and wages and thus serve as an indicator of economic growth. The Rockefeller Institute’s report says New York’s withholding receipts grew by 3.3 percent in the fourth quarter of 2013. That was less than half the national average of 7.8 percent, and also below the five-state Mid-Atlantic regional average of 4 percent. Only six of the 41 states with income taxes had lower withholding growth during the same period. (According to the same Rockefeller Institute report, New York’s employment growth in 2012 was also below average.)
One important caveat: on a year-over-year basis, New York’s personal income tax receipts in 2012 were reduced in part due to the Dec. 31, 2011, sunset of a portion of the “millionaires tax” that applied to incomes as low as $200,000. The extended tax applies only to incomes above $1 million for individuals and $2 million for couples. ***See added note at bottom of post.***
April 16, 2013
President Obama’s proposed cap on itemized federal income tax deductions for state and local taxes would cost New York residents $3.8 billion a year, according to a report released by Governor Cuomo’s office today. However, you’ll have to dig a little to find that number: Obama isn’t mentioned until page 11 of the 26-page document.
The opening section of the report (which is, by the way, useful and well-researched in most respects) focuses on how bad it would be for New Yorkers if the federal government were to completely eliminate the deduction for state and local taxes. However, no one in a position of authority in Washington is actually proposing such a thing. The much more more serious risk to New York is that the White House and Congress will agree to some form of limit on itemized deductions for high-income taxpayers, as Obama proposed in his budget last week (reviving a proposal he first trotted out three years ago).
April 10, 2013
President Barack Obama’s proposed federal budget revives his proposal to cap the value of itemized income tax deductions for the highest-earning 3 percent of taxpayers, a category starting at $200,000 of taxable income for single filers and $250,000 for married filers.
Under current law, if you’re in the 39.6 percent tax bracket, you get a 39.6 percent discount on the cost of items for which you claim deductions, assuming you’re not subject to the Alternative Minimum Tax (and if you make enough to be in that bracket, you’re probably beyond AMT range). Obama would reduce it to 28 percent, the highest tax rate in lower brackets.
By far the largest deduction claimed by high-income taxpayers, especially those earning $1 million and more, is for state and local taxes.
So guess which state’s tax base (with the possible exception of California’s) would be hit hardest by this change?
March 25, 2013
Governor Cuomo and the Legislature are about to add another gnarly twist to the state’s heavily cluttered personal income tax code with their agreement to create a new “Family Tax Credit.” The credit, as widely reported, is designed to put a $350 check in about a million mailboxes starting “on or before October 15″ in 2014 — within three weeks of the next statewide election. It would expire after 2016.
The credit is targeted to residents of New York State who have at least one child aged 17 or younger under 17 and adjusted gross income of $40,000 to $300,000. However, in order to determine who gets a check in the mail, the state Department of Taxation and Finance will need to rely on the latest information it has available — which will come from 2012 tax returns (those IT-201 forms New Yorkers have to file before April 15).
As a result, although this is supposed to be a break against 2014 taxes, the language in the new revenue bill says eligibility will be decided on the basis of family, income and tax status as of “the taxable year two years prior to the taxable year in which the credit is allowed,” which means 2012. For each of two succeeding years, eligibility also will be based on the tax return filed two years earlier.
Inevitably, thousands of those $350 checks will be delivered in the fall of 2014 to people who were eligible for the credit in 2012 but will no longer be eligible in 2014.
March 19, 2013
"We are once again cutting taxes."
Details aren’t yet settled, but news reports this morning quote Senate Republican Leader Dean Skelos as saying the 2013-14 state budget will include $700 million in tax cuts. Other reports and rumors suggest a somewhat smaller amount.
We’ll see soon enough. Meanwhile, as Capitol reporters and lobbyists disappear down the rabbit hole of Albany budget spin, keep in mind what then-Attorney General Andrew Cuomo said in 2010 when asked if he would agree to an extension of a temporary tax increase:
It was supposed to sunset. If it doesn’t sunset, it’s a tax [hike].
Speaking in his characteristic staccato style, Cuomo was not taking some unusual or idiosyncratic position. He was simply employing a common yardstick for evaluating the fiscal impact of policy changes: the current-law baseline.
March 4, 2013
Senate Republicans today unveiled some new proposed personal income tax (PIT) adjustments that would generate savings for middle-class families.* For a couple with income of $70,000 and two children under 17, the potential annual tax cut from the proposed Family Tax Relief Act would appear to come to roughly $700. The estimated revenue hit of $500 million from these changes would be relatively modest, especially if spread over a few years.
So far, so good. The dependent exemption, after all, hasn’t been touched in 25 years, and those credits were never indexed to inflation.
Unfortunately, the Senate GOP conference also wants to spend a whopping $1.3 billion to revive New York’s School Tax Relief (STAR) property tax rebates — a classic political check-in-the-mailbox waste of money that disappeared, widely unmourned, just three years after its 2006 election-year enactment. STAR rebates would be calculated as a percentage of savings already provided through the main STAR homestead exemption program, and would average $445 per homeowner, and $460 for seniors. The Senate passed a one-house STAR rebate bill last year, too. (Think of it as a $1.3 billion excuse for avoiding Triborough repeal and other school mandate relief.)
February 5, 2013
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The biggest of the almost-new taxes in Governor Cuomo’s “no new taxes” budget is being targeted for elimination by state Senate Republicans. They were joined today by business and industry representatives in calling on Cuomo to remove the extension of the Section 18-A “assessment” from his budget proposal.