Seeking to fill a $15-billion budget hole dug by the pandemic and resulting economic shutdown, New York’s state legislature approved a $212-billion budget that raises corporate and income taxes on the state’s most affluent earners.
The budget adds funding for schools, arts groups, small business aid, renewable energy, and tenants behind on their rent.
It also raises the personal tax rate from 8.82 percent to 9.65 percent for persons reporting $1 million or more in income or joint filers reporting at least $2 million.
Income above $5 million will be taxed at 10.3 percent; income above $25 million will incur a 10.9-percent levy.
The corporate tax rate was jacked from 6.5 percent to 7.25 percent through 2023.
Business leaders across the state and in New York City in particular, lobbied heavily against the tax boosts.
Executives said that tax increases are unnecessary because the state’s and nation’s economies are recovering, rising on a continuing tide of federal dollars.
Big Apple business leaders have warned that the income tax increase would leave New York City’s top earners with the highest combined state-and-city tax rate in the nation, which is likely to drive those earners out of the state as businesses adopt remote work as a new normal.
The loss of office tenants already is draining property-tax revenue from city coffers, they said, according to the Wall Street Journal.
JetBlue Airways has said it may move its headquarters from New York City to Florida, which has no personal income tax, when its current lease expires. Goldman Sachs also is mulling expanding its presence in Florida.
Blackstone, Icahn Enterprises, and Silver Lake Partners are among the companies that have either fled New York City or are expanding their footprints in the Sunshine State.
From July 2019 to July 2020, more people migrated out of New York than any other state, according to census bureau figures. More than 300,000 households in high-income New York City neighborhoods filed out-of-town change-of-address forms with the U.S. Postal Service from March through October last year.
The value of hotels and retail spaces fell 20 percent in the city’s fiscal year 2021 from 2020; office values slid 15 percent and apartment buildings 8 percent, according to city figures.
Property taxes made up almost half of New York City’s tax revenues in fiscal 2019, the WSJ reported.
TREND FORECAST: Big cities, small cities, big companies, small companies… rich and poor will unite to fight rising property, school and sales taxes.
Again, one of our megatrends for the years ahead are anti-tax movements, which, in turn, will form new political parties. Thus, despite the call to raise taxes to pay for both stimulus measures or lost revenue, the political demands will fall short and government jobs and services will decline.
