FPI Policy Brief Press Statement: Time to Expand the Millionaires’ Tax
FOR IMMEDIATE RELEASE:
Contact: Ron Deutsch, Fiscal Policy Institute, 518-469-6769, firstname.lastname@example.org
March 7, 2017. The Fiscal Policy Institute (FPI) recently released a Policy Brief analyzing New York’s gross income disparity, recommending common sense solutions to narrowing the gap.
Since the 1980s, the income gap in the United States—as indicated by the wealthiest 1 percent’s share of total income—has grown significantly. In fact, the Congressional Budget Office (CBO) has been compiling income data since 1979, and has found that the top 1 percent’s income has grown exponentially, while that of the bottom 99 percent has grown at a much slower rate. According to a 2016 report published by the Economic Policy Institute (EPI) for the Economic Analysis and Research Network (EARN) entitled “Income Inequality in the US By State, Metropolitan Area, and County”, the top 1 percent earned 45 times more than the bottom 99 percent in New York, representing the greatest disparity of any state.
“New York state leads the nation in income inequality. We have the largest gap between those that earn the most and those that earn the least,” said Ron Deutsch, Executive Director of the Fiscal Policy Institute (FPI). Deutsch further notes that nearly half (48 percent) of the total increase in incomes in New York from 2009 to 2015 accrued to the wealthiest 1 percent. “This extreme inequality is not only hurting our residents, it is hurting our economy as well.”
While the wealthiest 1 percent of New Yorkers are taking home the lion’s share of income gains, they pay a smaller share of their income in combined state and local taxes than lower and middle-income families—even with the state’s millionaires’ tax in effect. New York households with incomes under $100,000 pay higher effective state and local tax rates (ranging from 10.4 percent to 12 percent) than the wealthiest 1 percent of households (who pay 8.1 percent).
One reason the combined impact of state and local taxes is regressive is that most low- and middle-income families in New York pay a greater percentage of their income in sales and property taxes than they do in income taxes. Unfortunately, according to Deutsch, while New York State’s income tax is mildly progressive, it’s not progressive enough to offset the effects of highly regressive sales and local property taxes.
Given New York’s extreme income polarization, Deutsch emphasized that “The State’s top economic priority in 2017 has to be addressing its enormous income gap by passing an expanded millionaires’ tax.”
The best response to the regressive nature of New York’s overall state and local tax system is to make the personal income tax more progressive. To do that, New York should build on the governor’s proposed extension of the millionaires’ tax–currently set to expire at the end of 2017 –as well as implement either FPI’s 1% Plan for New York Tax Fairness or the Assembly Majority’s expansion plan, both plans would generate significantly more revenue ($2 billion or more) than straight extension.
“Our proposal would build on the state’s millionaires’ tax, retaining the phased-in middle class tax rates enacted last year, and increase tax rates slightly for the richest 1% of New York’s taxpayers,” says Deutsch.
The Fiscal Policy Institute estimates that their 1% Plan would raise income tax revenues by approximately $6.2 billion, roughly $2.5 billion more than the governor’s proposed extension of the millionaires’ tax.
“The governor’s proposed extension of the millionaires’ tax will help New York continue to support statewide priorities from education to health care”, said Deutsch. “And while it will also help offset the regressive nature of New York’s overall state and local tax burden, FPI would like to see the state go one step further by pairing it with enhanced low-income tax credits and additional high-end tax brackets.”
For more information on FPI’s 1% Plan for New York Tax Fairness, please click here.
The Fiscal Policy Institute (www.fiscalpolicy.org) is an independent, nonpartisan, nonprofit research and education organization committed to improving public policies and private practices to better the economic and social conditions of all New Yorkers.