New York State would collect billions of additional tax dollars from rich people and corporations each year in order to secure funds for expensive spending amid the pandemic, New York State Governor Andrew Cuomo said.
After striking a deal with Cuomo on the 212-billion-U.S. dollar budget on Tuesday, the New York State Senate and Assembly passed the budget bill for the fiscal year 2022, beginning April 1 this year.
New York State would raise an additional 2.7 billion dollars from higher personal income tax rates and 750 million dollars from higher corporate franchise tax rates in fiscal 2022, said Cuomo in a presentation on Wednesday.
The surcharge from the personal income tax and corporate franchise tax would be 3.3 billion dollars and 1 billion dollars in fiscal 2023 respectively, according to Cuomo.
New Yorkers earning more than 25 million dollars each year would be subject to 10.9 percent of personal income tax up from 8.82 percent.
Meanwhile, the personal income tax rate for people earning 5 million to 25 million dollars per annum was lifted from 8.82 percent to 10.3 percent.
Individuals earning 1 million to 5 million dollars each year would pay 9.65 percent of personal income tax up from 8.82 percent.
The wealthiest people in New York City face an additional 3.88 percent tax and could see their personal income tax rate rise to 14.78 percent, the highest in the United States.
The corporate franchise tax rate for companies with over 5 million dollars of yearly income goes up to 7.25 percent from 6.5 percent for three years, said Cuomo.
Meanwhile, New York State received 12.6 billion dollars of aid for this fiscal year from the federal government, Cuomo said. Cuomo added that these tax changes anticipate the repeal of state and local taxes, which would lead to lower net taxes in the State.
The tax rate hikes were welcomed by progressive legislators and groups but criticized by business. Given a substantial influx of federal funding, introducing a multi-billion dollar tax increase including an increase in business taxes is unnecessary, said Heather Briccetti, president and CEO of The Business Council of New York State in a statement on Wednesday.
Briccetti said while it was encouraging to see the addition of targeted assistance for business sectors most severely hit by COVID shutdowns and state restrictions, “we fear the additional spending and taxes will unfortunately hurt New York State more than help in its recovery.”