Issues: Progressive Taxation

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With a more progressive system of taxation and revenue sharing, New York State can net over to $30 billion more in revenue a year with the following reforms. With this additional revenue the state can fully fund schools and public services, rebuild infrastructure, and restore the fiscal health of distressed local governments and enable them to cut the state’s highest-in-the-nation property taxes.

Restore State Revenue Sharing (Cost: $5 billion a year)

  • Restore state revenue sharing with municipal governments (AIM – Aid and Incentives for Municipalities) to 8% of state revenues ($5.8 billion a year).

  • Use state revenue sharing to pay for unfunded state mandates in order to restore the fiscal health of local governments, fully fund public services and schools, and cut regressive sales and property taxes.

Full State Funding of Medicaid: Take this unfunded state mandate off the local property and sales tax. (Cost: $2 billion a year).

Eliminate the State Cap on Local Property Taxes: Let local governments set their own priorities among schools, services, and relief from regressive local sales and property taxes.

More Progressive State Income Tax : Restore the more progressive personal and business income tax structure of the 1970s (Revenue: At least $10 more billion a year).

Multi-Millionaires Tax : Update the income tax brackets to reflect today’s income distribution in the millionaire class so that the income tax is progressively graduated as income goes from a few million to tens of millions. (Revenue: $2.3 billion)

Stock Transfer Tax: Stop rebating the Stock Transfer Tax (Revenue: $12 to $16 billion a year).

Cut Corporate Welfare (Savings: Up to $4 billion a year).

Unincorporated Business Tax: Enact a state surtax on high-dollar pass-through income from LLCs and other business vehicles in order to recapture some of the 20 percent deduction granted by new federal tax cuts to pass-through business income ($1 billion a year).

Claw-Back Tax on Unproductive Federal Corporate Tax Cuts: Eanct a “claw-back tax” on publicly traded companies that receive tax breaks under the new federal tax law but do not create jobs or raise pay of workers. Exempt small businesses and start-ups (Revenue: $1 billion a year).

Windfall Profits Tax on Opioid Wealth: An assessment on pharmaceutical company fortunes built by abusing the prescription system to explode sales and distribute dangerous opioid painkillers beyond their proper use could raise billions for overdose prevention, drug treatment, and public health.

Close the Carried Interest Loophole: Tax income earned by hedge fund managers, private equity investors, venture capitalists and certain real estate investors – known as carried interest – as ordinary income, instead of at a lower rate as capital gains (Revenue: $3.5 billion a year).

More Progressive New York Estate Taxes: Add brackets with progressively higher rates for taxable estates over $10 million.

Internet Sales Tax: Expand the sales tax to cover all internet transactions in order to level the playing field for brick-and-morter retailers (Revenue: $160 million for the state, $160 million for the counties).

Circuit Breakers on Property Taxes and Rents: Tax credits paid by the state to prevent low income households from being overloaded with property tax or rent burdens.

Phase Out the Condo Tax Break: Condos are currently assessed at their rental value, while other homes and commercial properties are assessed at their resale value, resulting in an average 36% tax break for condos that shifts the property tax burden unfairly onto other property taxpayers. This condo tax break distorts the property tax, which is intended to fund local governments based on the value of property as a fair, proportional measure of each citizen’s ability to contribute. This tax break for condos, including single-family homes in condo associations, is inequitable and should be phased out.

Home Rule on Local Income Taxes: Give local governments the right to enact local income taxes – as New York City and Yonkers have been permitted to do – in order to diversity their funding sources and make the overall tax burden progressive.

Home Rule on Land Value Taxation: Give local governments the right to enact differential property tax rates between land and improvements. Land value taxation is a more progressive property tax. Land value taxation sets a higher rate on unearned income from land value appreciation and a low or zero rate on improvements like buildings on the land. It is a fairer property tax because it returns to the municipal and county treasuries the windfall of unearned value added to a property by social investments and improvements (such as nearby transportation, water and sewage infrastructure, businesses, housing, schools, parks, community gardens, and land-use planning decisions). These improvements are paid by others – taxpayers and other private investors – not the landowner. It returns this unearned income to the community for its public use. It also encourages compact development and discourages sprawl.

Reject State “Value Capture”: Reject recent state proposals to capture the rise in land values due to public infrastructure investments in New York City for the state’s coffers. Keep property taxation a local prerogative.

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