On Tax Cuts, Governor Andrew Cuomo Is Blowing Smoke
New York Governor Andrew Cuomo recently released his proposed budget for the fiscal year 2014-2015, and since then much has been written about the governor’s attempt to “cut taxes” and “change the perception of New York as a high tax state”. Unfortunately for residents of the Empire State, perception is not reality. A closer examination of Gov. Cuomo’s proposed tax changes reveals that in most cases, they would not result in a net reduction in New York’s state and local tax burden.
E.J. McMahon, President of the Empire Center for Public Policy, recently testified before a legislative hearing on taxes. He pointed out that over half ($1.4 billion out of $2.25 billion) of Cuomo’s proposed “tax cuts”, in specific “property tax relief”, are merely a tax shift. That is, they take a levy that is being assessed on the local level and shift it to the state level.
Presently, the non-partisan Tax Foundation ranks New York last out of the 50 states in its “State Business Tax Climate Index. With a top rate of 8.82 percent, its individual income tax is the second highest in the nation. If Gov. Cuomo is serious about lowering the tax burden on hardworking New Yorkers, he should take steps to lower both the individual and corporate income tax rates.
A good place to start would be in phasing out the “Millionaires’ Tax,” which Assembly Majority Ways & Means staff has called an “inherently unstable,” “volatile” and “unsustainable” revenue source. This is also a tax that the governor shepherded through the Legislature in 2011.
While his plan does reform the death tax by lowering the top rate from 16 to 10 percent, it still leaves New York as only one of 14 states that imposes any tax on the value of property and assets left to others as a result of dying. True reform would move in the direction of phasing it out altogether.
Overall, Governor Cuomo’s proposal isn’t serious in the scheme of working towards a more competitive, broad based, and reliable tax structure for the state. His budget mostly engages in tax shift gimmicks instead of enacting permanent tax cuts that the governor has made clear the state can afford.