Are Tax Rates Going Up In New York?

All the talk around the SALT Cap over the past year or so has put New York’s high personal income tax rates into focus. Just last month, President Trump locked into a Twitter debate with Governor Andrew Cuomo, arguing that "it is very hard and expensive to live in New York" because of the state's "ridiculously high taxes.”  Governor Cuomo countered that he had in fact lowered taxes. Whatever the case, with the SALT Cap hurting high-income New Yorkers, one obvious way to alleviate that burden would be to reduce state income tax rates. Even a little bit would help!

Shockingly, we could be going the other way. (That’s sarcasm, if you can’t tell). Late last week, Assemblyman Harvey Epstein introduced Assembly Bill A08532 to amend the tax law to raise personal income tax rates of the super-rich and direct revenue generated from those tax increases to be deposited to the credit of the New York City Housing Authority and the Division of Housing and Community Renewal. Putting the proposed increases into a simplified perspective, New York now has eight marginal tax brackets, ranging from 4% (the lowest New York tax bracket) to 8.82% (the highest New York tax bracket). Each marginal rate only applies to earnings within the applicable marginal tax bracket. Assemblyman Epstein’s proposed rates includes four new levels of tax rates, as follows:

• Taxable income over $1,000,000 but not over $5,000,000: 8.82% (this is the                             highest rate under current law)
• Taxable income over $5,000,000 but not over $10,000,000: 9.32%
• Taxable income over $10,000,000 but not over $100,000,000: 9.82%
• Taxable income over $100,000,000: 10.32%

An identical companion bill, S04511-A, was introduced by New York State Senator Julia Salazar in March 2019 and both call for the new rates to be effective in 2020. But nothing will happen on this until early 2020, when the Governor proposes his new budget and issues around new taxes and new tax rates pop up.

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