In 2011, New York took the important fiscal step of creating new tax brackets for top income earners.
These will expire in 2017 – unless a few multimillionaires have their way. Around 50 of the wealthiest people in the state have signed a letter stating: “We can well afford to pay our current taxes, and we can afford to pay even more.”
So exactly where are our current taxes at? Income under $42,450 is taxed no more than 5.9 percent. Income through $159,350, $318,750 and $2.1 million is, respectively, taxed at marginal rates of 6.45, 6.65 and 6.85 percent. Any further income is taxed at 8.82 percent.
Assembly Speaker Carl Heastie’s plan – endorsed by these 50 millionaires – gives most New Yorkers a tax cut.
Earnings between $40,000 and $150,000 would be taxed at 6.25 percent. Income past $1 million through $5 million, $10 million and beyond sees respective marginal rates of 8.82, 9.32 and 9.82 percent.
Almost none of us ever sees this kind of money. In fact, the top 1 percent in New York makes a whopping $665,000 per year.
Why do we need these hikes? It’s simple. We need to pay for important programs that protect the public and provide opportunity for all. Otherwise we run up a debt. And we know debt is a problem.
Conservatives talk a big game about balancing budgets – they’re willing to lay off teachers, underfund health care and neglect our infrastructure to do it.
Mysteriously, when the other side of the ledger is brought up, the “fiscal responsibility” talk stops.
Actually, in arguing against the Assembly’s proposal, Republican Senate Majority Leader John Flanagan argued that the rich are taxed too highly, even claiming that 45 percent of state residents actually pay no income tax.
Let’s assume Flanagan’s dubious and misleading numbers are in the ballpark. Not only do they suspiciously match other figures on federal taxpayers, but they conveniently omit that most non-taxpayers are children, students and the elderly.)
Flanagan still misses the totally obvious point: Poor adults pay almost nothing in taxes because they barely make any money.
For all the horrible suffering which the super-wealthy would have to go through with slightly higher taxes, those stuck in broken communities and a generational cycle of poverty are undergoing real economic challenges. These challenges could be alleviated by robust public programs to help them and their children achieve decent lives and an opportunity to climb the social ladder.
But what about that exodus of economic privilege Republicans constantly warn of?
Beyond the occasional anecdote, the phenomenon doesn’t exist. In fact, so few rich people even move that it’s barely worth mentioning. Stanford University actually found that those in poverty are twice as likely to leave the state. After all, would you relocate your entire family, throw away most of your social connections, and abandon your home, community and possibly the job that made you rich in the first place – all in response to a teeny-tiny tax increase?
You probably wouldn’t, and neither do the vast majority of rich people. Study after study demonstrates that very few people look at a slightly higher marginal rate above $10 million and upend their lives. After all, it’s not their livelihoods at stake – it’s less than 1 percent of an already enormous income.
People do leave New York, but it’s for other reasons. Perhaps some move because other states have lower corporate taxes, and thus better job opportunities. This too is questionable: Not only are there abundant loopholes in the corporate tax code, but New York has lower rates than 19 states – not to mention we are a global center of commerce in a way that no-corporate-tax Wyoming just isn’t.
Even so, we are talking about taxes on people, not corporations. If we raise the rate on millionaires, that doesn’t significantly affect the environment for doing business.
Let’s give the Republicans some credit, though. Even though their proposal guts our budget by letting the upper-income brackets expire, they do cut the $40,000–$300,000 rate (which they define as middle class) to 5.14 percent by 2025.
Democrats should match this rate for the actual middle class – the true engine of job creation. The less money you make, the more of it goes right back into the economy. But Democrats should also explicitly call out the farcical political ploy of lumping together such a large swath of earners.
Most importantly, Democrats must make clear what revenue means for the programs every single New Yorker relies upon for prosperity – and that includes the rich. For that reason, we can definitively discount the idea of some mythical tax exodus.
Steve Keller of Averill Park is a regular contributor to the Sunday Opinion section.