New York Takes Federal Bailout, Raises Taxes Anyways

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Posted by Sheridan Nolen on Thursday, June 3rd, 2021, 1:53 PM PERMALINK

Now every American is paying for the government malpractice taking place in Albany, NY.  

Gov. Andrew Cuomo and lawmakers in Albany reached an agreement on a $212 billion budget this session that is riddled with absurd levels of new spending fueled by $4 billion in tax hikes. This comes after New York state received $12.6 billion in federal coronavirus stimulus funds. 

In the approved budget, individual New Yorkers who earn more than $1 million a year and couples earning more than $2 million will see their personal income tax rate rise from 8.82% to 9.65%. Two new brackets, for those with income over $5 million and $25 million, would have an income tax rate of 10.3% and 10.9%, respectively. These taxes increases will make the combined city and state income tax burden on residents in New York the highest in the nation.  

Additionally, there is a corporate franchise tax hike for businesses with more than $5 million in annual income, jumping from 6.5% to 7.25%.  

Critics have warned that these tax hikes would cost the city much-needed revenue if residents and businesses look to take refuge in lower-tax states and cities. In fact, Citizens Budget Commission president Andrew Rein accused lawmakers of failing to “appropriately leverage the opportunity provided by the infusion of funds” from President Biden’s $1.9 trillion COVID-19 relief package. Translation: the state got a huge bailout that Cuomo lobbied endlessly for and yet still raised taxes recklessly. 

In effort to counter critics who say that the tax hikes will cause big earners and companies to leave New York, Cuomo claimed that there will be an “overall net” reduction if federal lawmakers restore the deduction for state and local taxes, or SALT.  

However, this is false. “There is absolutely no assurance that the SALT cap will be repealed, unless federal rates are jacked up higher than [President] Biden has already proposed,” said EJ McMahon of the Empire Center think tank. 

In his state of the state address in January 2021, Gov. Cuomo called on President Biden for this bailout, citing it as “basic economic justice and economic prudence.” Apparently, Gov. Cuomo’s definition of basic economic justice and economic prudence is to provide financial means for pork barrel spending.  

One line item in the approved budget, standing at $4,605,000, is for “services and expenses of contractual payments related to the retention of professional football in Western New York.” This translates to using state money for the Buffalo Bills football team, which so happens to be Gov. Cuomo’s favorite.  

Another $108 million payout goes towards the Kingsbridge Armory in the Bronx. This facility, which has been dormant for decades, is being considered to become a hockey complex.  

Hundreds of cultural, agricultural, and community groups are also set to receive money in the budget, including:  

  • $45,000 to The Belle Harbor Yacht Club for “building improvements.” 
  • $125,000 to the Christmas Tree Farmers Association to “promote Christmas trees.”  
  • $50,000 to The Hop Growers of New York to promote New York hops.  
  • $500,000 to the Brooklyn Alliance, Inc  
  • $500,000 to the Queens Chamber of Commerce  
  • $25 million to the Securing Communities Against Hate Crime Program  
  • $250,000 to Cornell University for the “Cannabis Workforce Initiative”  

 

Tens of millions of dollars in spending are also listed as “lump sum” appropriations in the budget. In other words, the public will never precisely know where the money is going.  

Gov. Cuomo is continuing to prove himself to be disingenuous, as he claims to need money from the federal government to help with budget deficits, but then turns around to tax the highest earners – and job creators – in the state.  

Cuomo’s stance here could also be a sign he’s capitulated to the Democrat supermajority in the state legislature, but is trying to keep up appearances. The Democrat legislative caucus is more radical than the Governor, and continues to hunt for even more tax hikes and more job-killing, economy-crushing policy, like a double gas tax and so-called anti-trust rules that would allow the state to police businesses activity. 

Photo Credit: Zack Seward

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