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New York Assembly Budget Would Raise Taxes on Wealthy

Posted on Mar. 16, 2021

Members of the New York State Assembly have proposed a fiscal 2022 budget that would increase existing and impose new taxes on the rich to generate additional revenue.

The $208.3 billion budget would increase taxes on the wealthy and impose a surcharge on capital gains for millionaires, according to a March 14 release.

“We are receiving significant federal funding, but we must also ask those who can do more to step up and help. The COVID-19 pandemic impacted every aspect of our lives, and we need to make investments that will aid in our state’s recovery, while ensuring that New Yorkers continue to have access to the vital services they need,” Assembly Speaker Carl Heastie (D) said in the release.

The budget would increase the personal income tax rate to 9.85 percent for single filers earning more than $1 million and couples earning more than $2 million. The current top rate is 8.82 percent for income exceeding $1,077,550. It would also create two new tax brackets: 10.85 percent for taxpayers with income between $5 million and $25 million and 11.85 percent for taxpayers with income over $25 million.

Bills have been introduced this session that would increase income taxes on millionaires. A. 5454, which would increase the top rate to 10.75 percent for taxpayers earning more than $1 million, has been referred to the Ways and Means Committee. S. 1513, which would impose an 11.82 percent rate on taxpayers with income over $100 million and create new tax brackets for taxpayers earning between $1 million and $100 million, has been referred to the Budget and Revenue Committee.

The budget's proposed personal income tax changes would raise $4.3 billion in revenue, according to the release.

The budget also proposes a 1 percent surcharge on capital gains for taxpayers earning over $1 million a year, which would bring in $700 million in revenue, and an 18 percent surcharge on corporate franchise taxpayers, corporate utility taxpayers, and insurance tax payers, which would increase revenue by $1 billion.

The budget would also reinstate the minimum business tax on corporate capital, which would generate $150 million in additional revenue and help make sure “that businesses with large capital resources but relatively low taxable income pay a fair amount of corporate tax,” according to the release.

Other provisions in the budget include increasing the top estate tax rate from 16 percent to 20 percent, bringing in $130 million in additional revenue, and implementing a recording tax on mezzanine debt and preferred equity investments, which would generate an additional $171 million, according to the release.

The budget would also impose a progressive tax on owners of second homes in New York City, which would bring in an estimated $300 million. Such a tax was also included in the fiscal 2020 budgets proposed by each chamber of the State Legislature in 2019 and had the support of Gov. Andrew Cuomo (D), but it was ultimately stripped from the final budget.

New York is facing a $15 billion budget shortfall. In his fiscal 2022 budget proposal, Cuomo called for spending cuts and tax increases on the rich in the event the state didn’t receive $15 billion in federal aid. 

According to a release by the U.S. House Oversight and Reform Committee, New York is slated to receive almost $23.8 billion in aid under the American Rescue Plan Act of 2021 (P.L. 117-2), which was signed into law March 11 by President Biden. However, Cuomo recently said that despite the federal aid, he is still considering tax increases to help fill the budget gap caused by the COVID-19 pandemic.

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