New York Gov. Andrew Cuomo and legislative leaders announced a tentative deal Tuesday on overhauling the state tax code, calling for a tax cut for residents making less than $300,000 annually, and an increase for those earning more than $2 million.
Cuomo said in a statement that the agreement, if the State Assembly approves it, would reduce taxes for 4.4 million middle-class New Yorkers.
“We are cutting taxes on middle-class New Yorkers and small businesses, which will inject nearly $1 billion into our economy,” the governor said.
The proposed agreement also calls for creating an infrastructure fund to add more than $1 billion to job-creating investment. The funding, according to Cuomo, will leverage $10 billion toward rebuilding of roads, bridges, parks, dams, and flood-control projects.
Over the last three years, persons who have earned more than $200,000 annually, and couples earning more than $300,000, have been subject to a “millionaires’ tax” surcharge.
Under the accord crafted among Cuomo, Senate Majority Leader Dean Skelos, R-Rockville Centre, and Assembly Speaker Sheldon Silver, D-Brooklyn, taxpayers filing annually and reporting more than $2 million in taxable income would pay 8.82%. While that exceeds the state’s normal top rate of 6.85%, it is slightly lower than what they would pay under the millionaire’s tax surcharge, which is set to expire next year.
The new tax rates would also take effect next year and expire on Dec. 31, 2014.
In addition, the Metropolitan Transportation Association payroll tax would be reduced for small business. Cuomo said that tax would be eliminated or reduced for 294,900 taxpayers overall.
By raising the self-employment income exemption, Cuomo said it would also be eliminated for an additional 415,000 taxpayers.
The state, according to Cuomo, would compensate the MTA, which oversees New York City’s transit systems, with $250 million in lost revenue. Maintaining payroll tax revenue was a priority for Joseph Lhota, who took over last month as the authority’s executive director.
State Comptroller Thomas DiNapoli said late Tuesday he would study the agreement. "While movement on these issues is welcome, it is critical that we spend within our means and prioritize our growing capital needs while creating jobs and addressing the tax code. Let’s not repeat the mistakes of the past," he said.
New York State has a Aa2 general obligation bond rating from Moody’s Investors Service and a AA from Fitch Ratings and Standard & Poor’s.
