Breaking: Governor Cuomo and legislative leaders have struck a deal on taxes

And while it doesn’t involve extending the millionaire’s tax, it does involve raising taxes on the very wealthy, at least temporarily.

This news just came out a few minutes ago via a press release from Governor Andrew Cuomo’s office, but the New York Times has a nice summary here.

Essentially, the deal will create several new tax brackets–the newly- implemented top bracket expires in December 31, 2014.

Those new brackets are shown in a handy table, below, from the governor’s press release. (PLEASE NOTE the figures in the table are comparing tax rates with the millionaire’s tax in effect, to those under the new deal, and that’s why it looks like almost everyone’s getting a tax cut.)

The new brackets would mean that every married-filing-jointly couple (so romantic!) that makes less than $300,000 will get a tax cut. And couples making more than $2 million–such as the Monopoly man and Mrs. Monopoly–will pay about 2% more (See the NYT article for a little more nuance on this).

Interestingly, it appears the top “middle class” tax bracket–couples making between $300,000 and $2 million a year–will be the ones to see their tax rates drop most significantly. Under the existing code, they paid between 7.85% and 8.97%–now they’ll pay 6.85%. But that tax rate would have dropped back to 6.85% in any event, when the millionaire’s tax expires at the end of the year.

Those making less than $300,000 will see their rates drop less than .5%.

These numbers are difficult to parse, but I’m going by what’s in the press release. Here’s that information, keeping in mind the top bracket’s rate’s are dropping compared to their current (with-millionaire’s-tax) rates:

Income Level Previous Tax Rate New Tax Rate
$40,000 to $150,000 6.85% 6.45%
$150,000 to $300,000 6.85% 6.65%
$300,000 to $2 million 7.85% – 8.97% 6.85%
Over $2 million 8.97% 8.82%

As is clear, that increase in the top tax bracket’s rate won’t entirely replace the revenue that’s lost when the millionaire’s tax expires. But according to the press release, it will bring in $1.9 billion that would otherwise have been lost. Again, that top bracket expires at the end of 2014–and apparently the brackets would “increase with the rate of inflation.”

I’m sure we’ll be unpacking the complications of these new rules in the days, weeks and months ahead.

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22 Comments on “Breaking: Governor Cuomo and legislative leaders have struck a deal on taxes”

  1. “That increase in the top tax bracket’s rate…”

    I’m not seeing that. When I look at the graphic, ALL tax rates are going down under the new system.

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  2. JDM says:

    “That increase in the top tax bracket’s rate won’t entirely replace the revenue that’s lost when the millionaire’s tax expires.”

    What won’t be replaced are the job producers who will be getting out of town.

    When that happens, middle classers will be expected to pay more taxes. It’s inevitable, and some seem willing to fall for it every time.

    Hot debate. Like/Dislike Thumb up 2 Thumb down 10

  3. PNElba says:

    Is this table correct? I’m with Brian. I also see all tax rates going down.

    Like/Dislike this comment: Thumb up 4 Thumb down 1

  4. Peter Hahn says:

    But they would have gone down differently if the “millionaire’s tax” had simply expired. Everyone would have been at 6.85% . (If I understand it correctly)

    Like/Dislike this comment: Thumb up 3 Thumb down 1

  5. JDM says:

    This is from the article in the NY Times summary that Brian links to:

    “Any increase in tax rates for the wealthy would mark a reversal for Mr. Cuomo, a Democrat, who ran for governor last year on a platform of opposing tax increases and said that increasing such taxes would hurt the state by motivating wealthy residents to move elsewhere. ”

    So. Cuomo, himself, recognized as a candidate that raising taxes would motivated the wealthy to leave.

    Also, true to form, he campaigned on keeping taxes low, and governs by raising them.

    Hello, Obama.

    Hot debate. Like/Dislike Thumb up 2 Thumb down 6

  6. Nora Flaherty says:

    Yes, I’m sorry–that’s unclear. The table compares tax rates as they currently stand (with the millionaire’s tax in place) versus where they’ll be under the new plan. Also note these tax rates will also expire.

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  7. It's Still All Bush's Fault says:

    “…the top “middle class” tax bracket–couples making between $300,000 and $2 million a year–…”

    That’s not exactly my definition of middle class.

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  8. Paul says:

    If you look at the NYT article if you take out the “millionaires” tax what you go from is the relatively flat rate of 6.85 percent to the numbers on the right side of the table you have above. Decrease for the top two and an increase for the highest wage bracket.

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  9. dave says:

    People making 2 mil a year are not going to be “getting out of town” – no one is going to start fleeing NY State because of this – that is just absurd.

    Furthermore, those people are not the only people who create jobs. In fact, when I look around my small town, the vast majority of the people who own a business – or have recently started a business – and thus hire employees – all fit nicely into one of those lower brackets who will be getting a cut!

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  10. hermit thrush says:

    What won’t be replaced are the job producers who will be getting out of town.

    When that happens, middle classers will be expected to pay more taxes. It’s inevitable, and some seem willing to fall for it every time.

    no, no, and no. this is a product of the conservative imagination, not reality.

    look, i think we can all acknowledge that there are at least some countervailing forces at play here. on the one hand, sure enough, higher taxes on a segment of the population will, at the margin, encourage people in that segment to move away. some revenue will be lost due to those who leave.

    on the other hand, if higher taxes are put in place, some revenue will obviously be gained due to those who stay and pay in at the higher rate.

    surely there are other factors at play too. it’s complicated, but personally, i don’t really care about the particulars. the question that matters is, how does it all balance out? on net, will there be more or less revenue?

    and for me, the key point is that this is an empirical question. it’s not something that can be resolved by theoretical arguments of the sort that jdm gives. it can only be resolved by collecting data and evidence.

    so, what is the answer? the answer is that tax flight is a myth. the answer is that the revenue gains from higher taxes tend to swamp the loss effects from migration. the money quote:

    The effects of tax increases on migration are, at most, small — so small that states that raise income taxes on the most affluent households can be assured of a substantial net gain in revenue.

    one striking example:

    Perhaps the most carefully designed study to date on this issue concerned the potential migration impact of New Jersey’s 2004 tax increase on filers with incomes exceeding $500,000. It found that while the net out-migration rate of this income group accelerated after the tax increase went into effect, so did the net out-migration rate of filers with incomes between $200,000 and $500,000, and by virtually the same amount. At most, the authors estimated, 70 tax filers earning more than $500,000 might have left New Jersey between 2004 and 2007 because of the tax increase, costing the state an estimated $16.4 million in tax revenue. The revenue gain from the tax increase over those years was an estimated $3.77 billion, meaning that out-migration — if there was any at all — reduced the estimated revenue gain from the tax increase by a mere 0.4 percent.

    people like jdm can go on and on all they like about “job-killing tax increases,” but the actual evidence, here on planet earth, is that they’re totally wrong.

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  11. Paul says:

    High property taxes and unfunded state mandates are the problem in NYS not income taxes. This whole discussion is a distraction.

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  12. PNElba says:

    If I were wealthy, why would I create jobs if there weren’t customer who could afford to buy my services or products?

    I agree with Paul. I pay far more in property taxes than I do in State income tax.

    Like/Dislike this comment: Thumb up 2 Thumb down 0

  13. Walker says:

    One fact that the “Job Creator” myth misses entirely is WHERE the rich and the 99% spend their money. Those who are just getting by spend their money locally– in general, it stays in the state, and it definitely stays in the U.S. Give the wealthy a tax break and that money has wings– a lot of it gets spent on European vacations and Caribbean luxury houses, it goes into off-shore tax havens and Swiss bank accounts.

    And as I will keep saying whenever the “Don’t Tax Job Creators” meme gets trotted out– if you’re serious about jobs, give a job-for-job tax credit for jobs actually created in New York State for state taxes, or in the U.S. for federal taxes. Across-the-board tax cuts on the wealthy in the name of “job creation” is utterly wrong-headed.

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  14. Two Cents says:

    Yes i too agree with paul, and may i interject SCHOOL TAXES are the bulk of my property tax bill. I’ll bet some of the 300,000 to 2 million dollar “middle class” earners are retired school administrators.

    Like/Dislike this comment: Thumb up 3 Thumb down 1

  15. JDM says:

    Dave and hermit: did you read the Andrew Cuomo quote I posted?

    I will highlight one small snippit:

    “tax increases and said that increasing such taxes would hurt the state by motivating wealthy residents to move elsewhere. ”

    (from Brian Mann’s link to summary)

    No where on the planet, hermit? Tell Mr. Cuomo he didn’t say this.

    Like/Dislike this comment: Thumb up 1 Thumb down 3

  16. hermit thrush says:

    this isn’t complicated, jdm. what cuomo said before, and you’ve been saying all along, is wrong. cuomo now seems to have the good sense to reverse himself. do you?

    Like/Dislike this comment: Thumb up 4 Thumb down 1

  17. JDM says:

    hermit: time will tell what consequences raising high earners’ taxes will have on our fair state. Then we will know what the Cuomo tax hike did.

    We already have history to learn from….

    The Tax Foundation ranked New York highest in the nation in the combined state and local tax burden in 2008. And as small-business lobbyist Mike Durant noted, New York has also “consistently ranked worst or in the top three worst in business climate. You can’t suck every penny out of people and expect them to remain in New York.”

    ….. or repeat

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  18. knuckleheadedliberal says:

    “And as small-business lobbyist Mike Durant noted, New York has also “consistently ranked worst or in the top three worst in business climate. You can’t suck every penny out of people and expect them to remain in New York.”

    It is really disgusting that lobbyists say such things. There are people who actually have lost everything in this economy, people who have had to apply for heating assistance and for food stamps who worked hard all their lives and tried to invest for retirement so they could live into old age without being a burden on society. And then you get some jerk like this Mike Durant who talks about how rich people are having every penny sucked out of them and calls New York one of the worst for business climate.

    The fact is New York State is one of the best places to do business in the world. That is why we have so many world class businesses located here.

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  19. Two Cents says:

    Lobyists have to say such crap, just like Cuomo had to say whatever he had to, to get to a position where he can do as he feels at such time.
    It’s all politics remember?
    Remember all of this when he runs for President, and the local papers, if there are any left, tell us to vote for him because he fixed the road through keane, toot-suite.
    I don’t know if i like his new tax re-structuring, but i never liked his politics, even though it will probably help me out in the short run, one thing i do agree with JDM about is he’s full of it, like all the rest of his ilk.
    And as far as entitlements go, the politicians can take my social security when:
    they pay for their mail
    haircuts
    drycleaning
    healthcare
    housing
    etc..etc..etc..

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  20. oa says:

    Someone told jdm that cuomo is a liberal. Therefore, jdm is vehemently against anything cuomo says or does. Pretty simple, really.

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  21. Two Cents says:

    Well, someone should also tell JDM the jobs the wealthy mostly create are the ones that mow their lawn, re-model their kitchen, Paint their house……

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  22. Walker says:

    “the jobs the wealthy mostly create are the ones that mow their lawn, re-model their kitchen, Paint their house……”

    Right, and those lawns, kitchens and houses are often as not located in Aspen, the Caribbean, Paris, etc. Not doing the State of New York a whole lot of good.

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