A tax agreement reportedly reached by New York Gov. Andrew Cuomo (D) and state lawmakers may mean that the wealthiest residents in New York City will face the highest combined state and city tax rate in the country.
Bloomberg reports that the agreement, if approved, would raise the tax rate from 8.82 percent to 9.65 percent for single filers making more than $1 million, citing sources close to the matter. Details on the reported $200 billion budget deal are expected to be shared soon.
Residents of New York City who make more than $1 million would then have to pay between 13.5 and 14.8 percent in taxes, Bloomberg reports, higher than the 13.3 percent in California for people making over $1 million, currently the highest rate in the country.
The agreement would create two new tax brackets. People making between $5 million and $25 million would be taxed at 10.3 percent and those making over $25 million would be taxed at 10.9 percent, Bloomberg reports. The budget agreement would have the tax rates expire in 2027.
Bloomberg notes that the proposed tax hike on the wealthy is a risky move for New York as many people may simply move to different areas of the country where tax rates are lower, such as Texas and Florida.
“We are entering an era of increased mobility, and the rise of remote work will mean that far more people vote with their feet. New York already has the nation’s highest tax burdens. Raising taxes on the state’s most mobile residents at a time of enhanced tax competition is a risky move, especially when tax revenues are currently stable,” Jared Walczak, vice president of state projects with the Center for State Tax Policy at the Tax Foundation, told Bloomberg.
Tax cuts for middle-class earners that were made in 2016 would remain in place, Bloomberg reports.
The agreement would also include $500 million in property tax relief for people who earn less than $250,000 a year, accounting for roughly 1.3 million New Yorkers, Bloomberg reports.
The budget deal would also reportedly increase corporate and income taxes by $4.3 billion, Bloomberg notes, with the extra revenue going toward aid for schools, undocumented immigrants and small businesses.
