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Lawmakers: No Budget Cuts Without Tax Hikes on the Rich

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The New York State Senate
File Photo

A coalition of Democrats — and one Republican — called on their colleagues in the state Legislature Thursday to pair any cuts to the state budget due to COVID-19, this year, with new taxes on the ultra wealthy in New York.

It’s not a new idea; Democrats in the Legislature have argued for years to increase taxes on the rich, but have failed to gain support from a majority of their colleagues.

But the proposal has picked up steam in recent months as the state faced unprecedented financial challenges due to COVID-19, which has all but destroyed the economy. New York is now projecting more than $13 billion in losses over the next year.

Those losses could be a catalyst for Gov. Andrew Cuomo to cut state spending across the board for education, hospitals, and local governments. He’s said those areas could face cuts of up to 20% in the coming months.

Cuomo has called on the federal government to, instead, direct billions of dollars in spending to New York to help the state avoid those cuts.

If that doesn’t happen, he’ll be able to propose major cuts to spending that will go into effect unless the Legislature acts to reject them. Lawmakers will have 10 days from Cuomo’s decision on spending cuts to respond with their own plan to balance the state’s finances.

As of Thursday, 100 members of the state Legislature — almost all Democrats — had signed onto a statement saying they would support a response to Cuomo’s cuts that includes a tax hike on the ultra wealthy. State Sen. Phil Boyle, R-Suffolk, is the lone Republican in support.

“The way we navigate these unprecedented times will determine whether we continue to reinforce polices that concentrate extreme wealth within the hands of a few or help to build a fairer and more equitable society,” said Assemblywoman Linda Rosenthal, D-Manhattan.

“Cutting vital services is not the only avenue to fiscal security, and it is not an acceptable solution to New York’s financial trouble.”

Several Democrats have now signed on to legislation from State Sen. Rachel May, D-Onondaga, that would increase taxes on wealthy New Yorkers.

The bill, which doesn’t yet have enough support to pass, would create a series of new tax brackets for high-income earners. The current highest bracket taxes individuals who make about $1 million or more at 8.82%.

May’s bill would raise the tax rate for individuals who earn more than $5 million to 9.32%. Individuals who make more than $10 million would be taxed at 9.82% under the bill, and those making more than $100 million would have a 10.32% tax rate.

Cuomo, when asked Thursday if he would support raising taxes on the rich, said he wanted to wait for the federal government to provide aid to New York before endorsing any proposals. He also said he would need to review the specific measure before taking a position.

“You can’t do that in the abstract,” Cuomo said. “You have to see what it is.”

Some budget watchdog groups support the idea of raising taxes on the wealthy to generate revenue, others don’t. The Fiscal Policy Institute falls into the former category and held a digital press conference Thursday with lawmakers in support of the idea.

“New York cannot recover from the pandemic if our first response is to choke off revenue to hospitals, schools, small businesses, and fire teachers, nurses, aides – all the indispensable people and services that make our communities great,” said Ron Duetsch, the group’s executive director.

Lawmakers have no immediate plans to return to Albany this year, but are expected to make at least one more trip back at some point to act on legislation. This year’s legislative session was cut short because of the coronavirus.