As New York’s Covid expatriates consider returning to the office, lawmakers in Albany should be shouting welcome home. Instead they’re eyeing big new tax increases that would give the state’s temporary refugees to Florida—or wherever—one more reason to stay away for good. Here’s a taste of the budget proposal that the state Assembly set out:
• Income taxes: Impose graduated rates on millionaires, up to 11.85%. This is much higher than today’s top marginal levy of 8.82% on joint filers earning $2.2 million. Under the Assembly’s plan, that existing bracket would be taxed at 9.85%. Earnings above $5 million would be hit with 10.85%. The new top marginal rate, 11.85%, would kick in at $25 million.
Since New York City has its own income tax, running to 3.88%, the combined rate would be 15.73%. That’s a bigger bite than even California’s notorious 13.3% top tax, and don’t forget Uncle Sam’s 37% share. Pretty soon living in a low-tax state looks inviting. Keep in mind that New York’s income tax is already progressive: The top 5% of filers contribute more than 60% of the revenue, the Journal reports.
• Capital-gains taxes: Put a 1% surtax on investment gains by people earning $1 million a year. That percentage might sound small, but New York already taxes capital gains as regular income. So start with the Assembly’s new top marginal rate of 15.73% for a Manhattanite. Add the 1% surtax. The top federal rate on cap gains is 23.8%. The grand total is 40.53%, and that’s before Joe Biden’s campaign promise to tax capital gains federally as regular income. What a thanks for investing to create jobs in the city.
• Estate taxes: Raise the top rate to 20%, from today’s 16%, for taxable estates above $10.1 million. Remember, again, this is stacked atop the federal estate tax of 40%, meaning the government’s marginal take would reach 60%. Is it any wonder that wealthy people spend big bucks hiring estate lawyers?