Tuesday, February 2, 2016

NYS Assembly proposes tax hike for millionaires, tax cut for middle class

ALBANY, N.Y. -- Millionaires would have to pay higher income taxes and the middle class lower taxes under a New York State Assembly plan announced Tuesday. 

The Assembly proposal would require individuals earning $1 million to $5 million to pay taxes of 8.82 percent, the state's current top tax rate. Currently individuals earning $382,000 to $2.1 million pay 6.85 percent. 

Individuals with incomes of $5 million to $10 million would pay income taxes of 9.32 percent, under the Assembly plan. Anyone earning more than $10 million would pay 9.82 percent in taxes. 

The hikes would raise an estimated $1.7 billion. About 56,000 taxpayers would pay more, with the average increase projected to be $33,000. Heastie noted that some 10,000 of those people are non-residents.

"It's a fair way to ask people to pay their fair share," said Assembly Speaker Carl Heastie, D-Bronx. "Someone making $5 million or $10 million a year, that's a small sacrifice."

There would be a small tax rate reduction for 5 million middle class earners, from 6.45 percent to 6.25 percent. That would save married couples filing jointly who earn $40,000 to $150,000 on average $50.

Tax rates for filers with income under $40,000 and those earning $150,000 to $300,000 would not be changed.

But about 1.6 million low-income workers would see an increase in the earned-income tax credit, with the average recipient receiving nearly $110 more.

The tax cut for the middle class and bigger earned-income credits for the poor is expected to cost about $450 million.

The changes in tax rates would be effective beginning in 2018 if they are approved by the state Senate and governor. 

Senate Majority Leader John Flanagan, R-Smithtown, dismissed the notion of increasing tax rates for millionaires in January. Cuomo did not include any changes to income tax rates in his proposed state budget.

"Whether it's income taxes, property taxes, business taxes, user fees, or tolls, we don't support raising taxes or asking hardworking New Yorkers to dig deeper into their pockets to pay more," Flanagan said Tuesday. 

Assemblyman Bill Magnarelli, D-Syracuse, is listed as a co-sponsor on the Assembly bill that would change the tax rates. 

Heastie said the higher taxes on millionaires would generate sufficient revenue for the state to increase funding for schools, the aging, infrastructure and other public priorities.

The Associated Press contributed to this report.

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