Governor Andrew Cuomo deserves a thumbs up for managing to deliver the state’s first on-time budget in years. However, he deserves a thumbs down for failing to include in the budget an extension of the “Millionaire’s Tax.”
Recently, a rally was held on the steps of the Tweed Courthouse urging the governor to extend the tax and funnel the revenue to education, in order to avoid teacher layoffs and severe cuts to programming.
This rally, though, proved to be pointless, at least in Cuomo’s eyes. The new budget does not extend the “Millionaire’s Tax,” which is set to expire in December, a fact that was more than disappointing and disheartening, especially to the parents and educators in Lower Manhattan who are faced with a severe overcrowding crisis in public schools.
The top few percent of America’s income distribution has benefited from fiscal policy at the federal level over the past three plus decades that has led to the most unequal income distribution in America since the 1920s.
Community Board 1 recently passed a resolution that apparently never found its way to Cuomo’s desk in Albany, which spelled out why an extension is desperately needed. It read, “The top 1 percent of City households averages $3.7 million, or an income of $10,137 a day — what the bottom 10 percent lives on for a year. New York’s highest earners have emerged out of the current economic recovery with record income growth and profits and 1 percent of the City’s residents now earn almost 45 percent of the total wealth in the City.”
Both Governor Cuomo and our mayor seem to share the misguided notion that extending this tax would result in an exodus of New York City’s most wealthy, a “millionaires flight.”
We do not believe this to be the case. It is not easy to simply switch residences and weather the scrutiny to prove it. Tax rates of surrounding states are not low, either. Furthermore, many of the wealthy demand, and benefit from, a high level of municipal services, from lower crime to well–managed services.
There have already been hundreds of wealthy New Yorkers who took it upon themselves to sign a pledge saying they would remain and would prefer to see the revenue generated from an extension of the tax go toward helping schools and preserving services for those less fortunate.
Some also believe those affected by the tax would be less able to contribute to the economy because they would have less money to spend. But the most upper strata of New York income earners are less likely to spend their money here to begin with. Indeed, any extra money they would see if the tax is not extended would probably be invested, whether in a hedge fund, a second home or a business venture in another state or country altogether.
Assembly Speaker Sheldon Silver, as well as state Senator Daniel Squadron, have both said they plan to continue pushing for an extension of the millionaire’s tax. They undoubtedly have a tough road to hoe. And they are going the extra mile in insisting that it become a true Millionaire’s Tax — currently, it applies to individuals who make more than $200,000 a year and households with taxable earnings above $300,000 a year.
We hope that those who care about this issue continue to press Governor Cuomo to extend the tax. It would help millions of people, and its burden on the wealthy is more than offset by the federal tax break that upper income taxpayers received when President Obama extended the Bush tax cuts.
