GOP, Dems differ on tax cut phase-in
New York state is flush with cash on the strength of higher-than-anticipated tax receipts.
Assemblyman Michael Durso, R-Massapequa, wants to share the unexpected windfall with the state’s middle class taxpayers. Last week, Durso introduced A.8862 to accelerate the state’s Personal Income Tax rate for middle-income taxpayers originally enacted in 2016.
Durso’s plan comes with a $2 billion hit to state tax revenue and would apply middle class tax rates now that are currently scheduled to take effect in 2024.
“As New Yorkers continue to struggle under the weight of inflation and uncertainty surrounding the COVID-19 pandemic, the state has collected substantially more tax revenue than anticipated at the time the 2021-22 state budget was enacted,” Durso wrote in his legislative justification. “Because of the state’s strong revenue collections, New Yorkers should receive the benefit of tax relief. This bill would provide relief to taxpayers by accelerating the final years of the middle-class tax cuts enacted in 2016, helping New York’s taxpayers keep more of the money they earn to help offset the threats they face from rising prices and higher costs from inflation.”
Gov. Kathy Hochul’s recently unveiled 2022-23 budget also includes an accelerated phase-in of the middle-class tax cut. The eight-year phase-in of personal income tax cuts for middle-class taxpayers first began in Tax Year 2018 and is currently scheduled to be completed at the start of the 2025 Tax Year. The tax cut applies to roughly 6.1 million New Yorkers.
“Now let’s talk about putting more money back into people’s pockets,” Hochul said during her budget address. “Rather than raise taxes, this is about tax relief.
Accelerating a $1.2 billion tax cut originally scheduled to take effect between 2023 and 2025. This [means] way more than 6 million middle-class taxpayers getting their much-needed money a lot sooner. At a time when inflation is robbing families of long awaited gains and income, and recognizing that property taxes are still too high, we will provide a $2 billion property tax rebate to more than 2 million middle-class homeowners. And we’re delivering $250 million in tax credits for small businesses to help them pay for COVID related expenses.”
Hochul is proposing a 3.1% spending increase in taxpayer dollars for her 2022 proposed budget. That spending is fueled by the state’s expected receipt of $5 billion more in tax revenues through March than projected last fall. That revenue jump is due in part to the state’s slowly recovering economy, as well as tax hikes lawmakers passed last year on high earners and large corporations. Hochul’s budget would also make the vacation rental industry — including Airbnb — face state and local sales taxes.