State lawmakers and Gov. Andrew Cuomo this week finally reached an agreement to pass the state’s past-due budget, and the deal confirmed speculation that the state would patch its pandemic-tattered finances with higher taxes on the wealthiest New Yorkers.
Given the financial hardships that working-class Americans have endured over the past year, we find it hard to muster much sympathy for New York millionaires, who will see their tax rate rise from 8.82% to 9.65%, according to The Associated Press. But Cuomo and the state Legislature shouldn’t make a habit of this new revenue stream, which should be seen only as a temporary solution to a one-off crisis, lest we find ourselves taxing nothing at all from rich ex-New Yorkers who fled the state.
The so-called “millionaire’s tax” has never been popular with Cuomo, who correctly views the disproportionate wealth of Wall Street’s tallest hogs as a key source of revenue that other states would love to have. Connecticut and New Jersey have been nibbling away at New York’s finance industry for decades, and with New York City’s additional 3.88% surcharge, the new tax rates push New York City past California to set the nation’s highest tax rates on millionaires.
We’re not saying these folks can’t, or shouldn’t, pay higher taxes. But it’s not like New York was giving millionaires a sweetheart deal. They did, however, get one from the unnecessary, fiscally reckless Republican tax cuts passed along party lines in 2017 by President Donald Trump, Senate Majority Leader Mitch McConnell and House Speaker Paul Ryan.
McConnell warned this week of President Joe Biden’s proposed $2.5 trillion infrastructure package: “You’re either alarmed about the level of national debt and the future impact of that on our children and our grandchildren or you aren’t.” This from the man who along with Trump oversaw a $7.8 trillion rise in the national debt from 2016 to 2020, and whose aforementioned tax cut package cost the federal government $2.3 trillion over 10 years, according to Trump’s own budget data.
Fortunately for New York, Congress in January was freed from its six-year stranglehold under McConnell’s leadership, during which the speaker also directed an inordinate amount of federal spending to his home state of Kentucky. New Senate Majority Leader Charles Schumer, D-N.Y., played a key role in the state and local relief measures passed by Congress in March, and he and Biden are seeking to pay for a new infrastructure bill in part by eliminating Trump’s 2017 corporate tax cuts.
Trump, himself a notorious tax cheat, perhaps made the best argument against those tax cuts in the first place with his incessant boasting about how well the economy and stock market were doing before they were passed. In good times, they were a pointless indulgence. In bad times, they’re a wasteful liability.
But if the U.S. raises corporate taxes, one might ask, won’t those corporations simply move overseas? They might, which is why we favor another tax measure proposed this week by a different Biden administration official, Treasury Secretary Janet Yellen, who called for a global minimum corporate tax to fight what she called “the pressures of tax competition and corporate tax base erosion.”
“Competitiveness is about more than how U.S.-headquartered companies fare against other companies in global merger and acquisition bids,” Yellen said. “It is about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods.”
Taxation at the federal level, and perhaps even worldwide, will soon be much more fair. Cuomo and state lawmakers will likely find governing much easier without a tax-evader in chief running the country, so maybe next year the “millionaire’s tax” can go back to being solely an emergency measure.