As we approach the start of the 2012 State Budget in Albany, the most discussed issue is the extension of the so-called Millionaire Tax. The proposal would extend for another year the existing tax rate on those earning more than a $1 million a year at 8.97 percent.
The rate on millionaires would be reduced to 6.85 percent on Dec. 31 if no action is taken in Albany. The surcharge generates upwards of $4 billion a year. Proponents state that the additional funding is necessary to maintain state spending and programs. Opponents say the additional tax will injure the states economic recovery.
In 2009, I voted against this tax surcharge because the surcharge was imposed not on millionaires but those with incomes of $250,000 or more, and the revenue was used to fuel one of the biggest spending increases in New York State history. We could ill-afford such a tax and spending policy in the middle of a recession.
Under Gov. Andrew Cuomo, the state of New York has begun to get its fiscal house in order. A $10 billion budget deficit was eliminated with no new taxes or borrowing. Medicaid costs were brought under control. State bureaucracy was consolidated. A 2 percent real property tax cap was implemented to control local government property taxes. However, we are far from finished. 2012 will be a critical year to move New York State forward.
Here are the facts: If the tax rate returns to 6.85 percent for those making $1 million or more, they will be paying the same tax rate as a family of four making $40,000 a year.
Although I represent the Hamptons, not one millionaire has contacted me to complain about the 8.97 percent rate or has said they are leaving the state. At the same time, my office continues to be inundated by middle class residents who are being overwhelmed by real property taxes. Many have left the state. The 2 percent property tax cap was a good first step, but only a first step. New Yorkers need property tax reduction, not just a cap. We don’t need to give state government more money to spend, but we do need to have a fair tax policy reflecting the ability to pay.
That is why I am sponsoring A. 7673. This legislation is quite simple. It would extend the existing 8.97 percent tax rate on millionaires. The legislation would also create a real property tax “circuit breaker” program for middle class homeowners earning $250,000 or less. The legislation would cap property taxes based upon a percentage of income reflecting the ability to pay. Excess property taxes would be refunded through an income tax credit. This would reduce property tax payments by the middle class by $2.3 billion dollars. The remaining revenue would be placed in a separate account for state aid to education, further reducing school taxes and maintaining education quality.
The combination of the 2 percent property tax cap, the middle class circuit breaker property tax credit, and shifting education costs to the state income tax and away from the local property tax would provide real tax relief for working and middle class New Yorkers. It is fair and equitable and is the path to real economic recovery for Long Island and all of New York.