NYS Leaders Should Reject Sales Taxes on Clothing and Focus on Income Tax
Leaders Should Listen to the Public and Tax High Income Earners; Lower and Middle Income New Yorkers are Already Taxed Enough
ALBANY, NY (06/24/2010)(readMedia)-- State Leaders are now talking about additional sales taxes on clothing to close the budget deficit and it is high time someone said the "emperor has no clothes." The problem is that soon many low-income residents may have no clothes either.
If State Leaders want to close 10% of the deficit with tax increases then they should base those tax increases on a resident's ability to pay. Adding an additional 1% bracket, for 2010 and 2011, for taxpayers with taxable incomes over $1 million a year, would raise $ 1 billion a year or more in state revenues and would begin to level out the inequities in our tax system.
Recent polls (Peter Hart 5/2010, AFSCME 6/2010) have shown that most New Yorkers favor taxing the wealthy a little more to close the budget gap. They also show that the public knows that the richest New Yorkers are not paying their fair share of taxes and that they are paying more than their fair share.
Our leaders have an opportunity to close this budget down, make some restorations to some programs and services and create greater equity in our tax system.
A true millionaire's tax would affect approximately 49,000 taxpayers that EARN over $1 million dollars per year. Almost half of those tax payers are non-residents already (they live in states like NJ and Conn. but make their millions in NYS so they are required to pay NYS Income Tax), so the notion that they will flee NYS is nothing more than a red herring.
In 2009, New York State added two temporary brackets (for 2009, 2010 and 2011) to the State's Personal Income Tax: (1) an increase of 1% for single taxpayers with taxable incomes above $200,000 and married couples with taxable incomes above $300,000, and (2) an additional 1.12% for taxpayers with taxable incomes above $500,000.
According to the Institute on Taxation and Economic Policy, the poorest and middle class New Yorkers pay more of their income in state and local taxes than do folks with incomes at or above $1 million (even with the current temporary increases in place as is evidenced by the chart below). This is due, in large part, to the fact that top income tax rates for the wealthiest have been slashed from 15.375% to 6.85% over the last 25 years. Adding to that, the NYS Division of Budget has indicated that people making over $200,000 per year have seen their incomes grow by 108%, while those under $200,000 have seen their incomes grow by only 15% (2007). Additionally, recent news reports show the wealthiest continue to see the larger income gains (post-fiscal meltdown) than the rest of Americans.
The disparity is alarming; and during these tough economic times, those in lower income brackets are also facing unprecedented unemployment, foreclosures and need for services they never thought they'd have to tap into (which are also being cut).