School and business groups, not surprisingly, had different reactions today to Gov. Andrew Cuomo’s discussions about changing the tax code and perhaps keeping higher income taxes on the wealthy.
Billy Easton, executive director of the labor-backed Alliance for Quality Education, said the state is suffering from letting the rich get a tax break come Jan. 1—at the same time schools, health care and other services are being cut.
The state will lose at least $4 billion in annual revenue when the higher income-tax brackets on those earning more than $200,000 a year expire.
“There is a choice that needs to be made, and a progressive revenue plan is absolutely essential to protecting our schools, communities, jobs and everything that is important to this state,” Easton said.
Michael Durant, executive director of the state chapter of the National Federation of Independent Businesses, said New York is already among the most heavily taxed states in the nation. Keeping higher taxes on the wealthy and on businesses would only hurt the state’s competitiveness.
Durant and Easton said they have not seen any proposal from Cuomo, who hasn’t detailed his plans, so it’s hard to say specifically whether they would support an initiative to change the tax code.
“I have a lot of concerns, but I’m not going to come out and blowtorch this idea without seeing it,” Durant said. He added, “If we’re going to continue to be the highest-taxed state, I’m not really sure that’s going to be spurring any economic growth – because what company is going to want to come in here and who is going to want to start a business knowing that they might be decimated by taxes?”
Cuomo has talked throughout his first year in office about holding down taxes as a way to make the state competitive with other states and to spur job creation. He continued that theme this morning in two radio interviews, saying in one that “If you use the tax code right, it’s a potent economic generator. If you use it incorrectly, you can stifle business.”
As the Wall Street Journal first reported, Cuomo is believed to be considering several options, such as higher income taxes for millionaires but lower than the rate that is set to expire at year’s end.
That way he can claim only millionaires—not those making more than $200,000—are paying higher taxes and, he could argue, even millionaires would still essentially be getting a tax break in 2012 compared to 2009 through 2011.
Additionally, Cuomo might seek to use the additional income—estimated by the Assembly at about $2.8 billion for the next fiscal year if the rates stay the same and just hit millionaires—for economic-development programs or infrastructure projects, which might appease some business groups.