New Yorkers for Fiscal Fairness Executive Director Responds to State of the State
ALBANY, NY (01/05/2011)(readMedia)-- We need to fix our upside-down tax system. It is not enough to simply say taxes are too high. Who are they too high for? The wealthy? The middle class? We have an opportunity this year that we must not squander. Rather than letting the income tax surcharge on the wealthiest expire - we should keep them in place and use that revenue to fund a real property tax circuit breaker for struggling working/middle class families in New York State. The Governor has clearly articulated the problem - unfortunately he is proposing the wrong solution."
Governor Cuomo's first step should be extending the temporary income tax increase on the top earners. In 2009, Albany took a step in the right direction by passing this exceedingly modest surcharge: one percent on incomes between $300,000 and $500,000 and about two percent on incomes above that.
Though the wealthy barely feel it, the policy has been a godsend for the state. It generates almost $5 billion a year. Five billion dollars could pay for major job-generating infrastructure projects – prevent cuts to education and healthcare programs and fund middle class tax relief through a Property Tax Circuit Breaker for struggling middle class homeowners who bear the brunt of the tax burden in this state.
Even with the surcharge, the wealthiest 1 percent still pay proportionally less than the middle class. Add that to the impact of the extension of the Bush tax cuts. It's still a great time to be rich in New York.
Extending the high-end surcharge is the first step towards fixing our state's economy; the Governor's proposals are a train speeding in the opposite direction. Property tax caps, spending freezes and service cuts will deepen inequality, worsen the jobs crisis and send Main Street economies tanking.
Afterschool programs, community health services and affordable mass transit -- lifelines for struggling New Yorkers -- will be decimated. Those lucky enough to survive more rounds of layoffs will have a harder time getting to their jobs and caring for their families.
Governor Cuomo has a golden opportunity to create jobs and usher in a new era of true fiscal responsibility. First, he should extend the high-end income tax surcharge. Then he should get to work setting our revenue system right side up.
Here's why Governor Cuomo and the NYS Legislature need to continue the surcharge on upper income New Yorkers
* the richest one percent of households in NYS increased their share of all income statewide from 10% in 1980 to 35% in 2007
* in New York City the income share going to the top one percent rose from 12% in 1980 to 44% in 2007
*the richest one percent of New York State households-which have an average income of $2.3 million-will receive an average tax cut of $123,890 in 2011
*The richest one percent-whose incomes already grew 36 times as fast as the incomes of the bottom 95 percent from 1980 to 2007-will get over one-third of the entire tax cuts destined for New Yorkers
* Wall Street pay and the average incomes of New York State's top 5% more than doubled and their share of total income rose from 31 to 49%
BUT FOR THE REST OF WORKING NYers HERE's WHAT'S HAPPENING:
-Real median hourly wages barely improved over this period, inching up by less than 1% over the entire period
-Real median family income increased by less than half a percent a year
-New York's poverty rate was basically the same in 2007 as in 1990 (14.5 percent)
-The average real earnings of a young (age 25-34) college-educated worker fell by 14 percent from $60,000 to $52,000
This inequity is pulling NY apart when everyone benefits if we grow together. A more equitable income distribution for NYS would result in faster and more sustainable overall economic growth, since a more broadly dispersed pattern of income boosts consumer spending, productivity-enhancing investments in higher education and the wellbeing of NY families.