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December 5, 2011

Cuomo’s income tax canards

E.J. McMahon

Governor Cuomo’s tax-hike spin machine is in overdrive. The governor just issued an “op-ed” on tax reform that claims the state’s current income tax code “is just not fair,” implying strongly that filers with low-incomes pay taxes at the same rate as millionaires.

Fairness is a subjective concept, but the governor’s op-ed is wildly misleading.

He begins by repeating a favorite canard of the “millionaire tax” proponents:

I have posed the following question to Albany veterans, befuddling almost all: at what income level does the State’s top personal income tax rate become effective? Answers range from about $100,000 to $1 million. Virtually no one guesses the correct answer: only $20,000 for an individual taxpayer; and only $40,000 for a two-earner family. So, in New York under the permanent tax code, an individual making a taxable income of only $20,000 pays the same marginal tax rate as an individual making $20 million. It’s just not fair.

A few sentences later, he says “to me ‘fairness’ dictates that the more you make the more you pay and the higher your income the higher your rate.”

Taken together, these statements are clearly designed to leave readers with the strong impression that the guy making $20,000 and the guy making $20 million are treated the same — that, in other words, the New York State personal income tax is not progressive.  But this is wrong. And any one of the dozens of top-notch tax policy experts working for the governor in his Division of Budget and Department of Taxation and Finance could have told him so.

In fact, New York has one of the most progressive income taxes in the country, as documented in this 50-state study by the respected and non-partisan Minnesota Center for Public Finance.   Check out this table, lifted directly from the report, based on the ratio of taxes paid by married filers in high and low income levels:

And this one:

Then there’s this study by the left-leaning Center on Budget and Policy Priorities, which shows how New York’s treatment to flow-income working households is among the most favorable of any state.  In fact, a two-parent family of four in New York doesn’t even begin paying taxes until its income surpasses $40,300.

Middle-class New Yorkers certainly could use a tax break.  The tax code has plenty of problems and needless complexities that need fixing. And it’s good to hear the governor suggesting he’d like to index the tax brackets to adjust with inflation going forward.

But most of Cuomo’s tax reform article is a mix of hype and inaccuracy, designed to make the Legislature and the public more receptive to his push for higher marginal rates — because he wants the revenue in place before he releases his budget in late January.

Filed under: Taxes, Uncategorized


  1. If we could only get a straight answer from our trusted leaders. I feel very frustrated with the spin that is put on most comments by our leaders from both sides. We continue to fight the battle for the truth. I think they feel most people do not pay attention because of their busy lives. What a shame. I for one with my family will fight the battle to continue to live in this great country.

    Comment by Curt Webster — December 5, 2011 @ 5:14 pm

  2. ROFL. I see you’re still up to picking and choosing only the finest hand-picked data that supports your claims EJ.

    Try changing table 1 to show an single person with $20k in taxable income at the low end and let us know what the “gap” is then. As a former employee of DTF, I would expect you are well aware that someone with $20k in income pays the same exact marginal rate as someone with $1M in income under the “normal” marginal rates without the surcharge = 6.85%. And I would guess than unless there is a state where the upper echelon have lower marginal rates than those in the lower tax brackets thus showing a very unfair tax structure (and no states have such a set of brackets to my knowledge), I would be that we would be amongst the least progressive states in the nation when it comes to income tax. As the vast majority of wage earners in this state make at least $20k a year, your spin on this stinks like freshly fertilized farmland on a warm afternoon.

    Rinse and repeat that same exact situation with MFJ taxpayers with an lower income threshold of $40k - and the results will be the same as the single person.

    Finally, I love your appeal that Cuomo should simply talk to his staff at DTF and DOB to get the “real” story. Without Republican lackeys like you occupying offices there anymore, he DOES get the real story now.

    I’m sure you’ll delete this because hey, you can’t have someone tearing down your spin on your own site, but you and I BOTH know I’m right and you’re simply full of hot air and hand-picked data here - as usual.

    Comment by Darth Stateworker — December 5, 2011 @ 7:12 pm

  3. Dear “Darth”: You’re wrong. A single person with $20K in wage income pays income tax of $448.80, or 2.4 percent of his income, while millionaires typically pay an average of 6.2 percent under the permanent law ($1.24 million) plus two more percentage points ($400,000) under the temporary brackets. An individual with taxable income of $20,000 has to make $27,500 before he has a single added dollar of income is subject to the top rate. That person pays about $950, or 3.5 percent his gross — still a much smaller share than the person at the top of the income scale. The effective rates are considerably lower for middle-class families and working people with children. And, as a genius like you undoubtedly already knows but doesn’t acknowledge, hundreds of thousands of New Yorkers at the bottom of the income scale pay no income tax but get an earned income credit.

    Finally, Mr. Whoever-you-are, you are right about one thing. If you want to have your all-knowing comments posted on this blog in the future, you will need to offer some original analysis to leaven the snark. Until then, you are, indeed, blocked.

    Comment by mcmahon — December 6, 2011 @ 8:57 am

  4. EJ,

    Wondering if you saw this piece: http://www.bloomberg.com/news/2011-12-01/raise-taxes-on-the-rich-to-reward-job-creators-commentary-by-nick-hanauer.html

    On its face, the logic seems fairly sound, to me. What’s the counter-argument?

    Comment by zack — December 6, 2011 @ 9:27 am

  5. Dear Zack,
    For every article like the one you cite, you can also find one like this: http://online.wsj.com/article/SB10001424053111903639404576516724218259688.html

    In any event, the argument here is whether it would be harmful to economic competitiveness for New York to raise its marginal rate on the “rich” (however defined) when taxes are lower in most other jurisdictions. It seems to me that even people who favor higher income tax rates on the federal level should recognize that the argument is different in an open economy on the state level. Research supports that notion.

    Thanks for pointing it out.

    Comment by mcmahon — December 6, 2011 @ 10:34 am

  6. [...] said any changes to taxes must be tied to crucial structural changes like pension reform. The Empire’s Center E.J. McMahon has gone on the attack against the basic Cuomo argument that the state’s tax code isn’t [...]

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