ALBANY -- Most New York taxpayers will see their overall income tax rates trimmed slightly next year following overwhelming legislative approval of a bill Gov. Andrew Cuomo plans to sign.
The measure is expected to generate an estimated $1.9 billion in new revenue, meaning a net tax increase in a plan that is drawing criticism from both ends of the political spectrum.
The fiscally conservative Manhattan Institute said it breaks Cuomo's promise not to raise taxes in what is an essentially modified extension of the surcharge on top earners that would have expired otherwise on Jan. 1
The Occupy Albany movement, which has called for higher taxes on millionaires, said it furthers economic inequality in a system that already favors the rich.
Cuomo called it a fair and practical step to help stimulate jobs in a tough economy. Most legislators praised the tax cuts expected to reach 4.4 million middle-class New Yorkers.
"This was a function of an economic reality and deteriorating economic conditions," Cuomo said after the Senate's 55-0 approval Wednesday night. He said it should help create jobs with some of the tax cuts and construction spending, while closing part of the projected $3.5 billion state budget deficit next year.
The Assembly voted 132-8 to pass it early Thursday. Speaker Sheldon Silver, a Manhattan Democrat, said they had faced unrelenting opposition in trying to extend the current tax rate on millionaires, and the bipartisan agreement was a big win for working New Yorkers. He said $690 million of tax relief over each of the next three years will reach more than 99 percent, or some 4.4 million, of all tax filers.
Senate Majority Leader Dean Skelos, a Nassau County Republican, noted the middle-class tax cuts and said the bill eliminates the payroll tax that supports the Metropolitan Transportation Authority on most small employers now paying it. Major business groups supported the bill, he said.
It also contains a public-private infrastructure repair fund, a tax break for manufacturers, and $50 million in aid to upstate communities trying to recover from historic flooding in the late summer. The funding is also expected to avoid another year of cuts to education and health care.
For income taxes, it lowers the rate for households earning $40,000 to $300,000 and single filers making $20,000 to $150,000 annually from 6.85 percent to 6.45 percent.
For married New Yorkers filing jointly and making $150,000 to $300,000 - or single filers making $75,000 to $150,000 - it lowers the rate from 6.85 percent to 6.65 percent.
Higher earners would have otherwise seen their rates drop back to the permanent rate of 6.85 percent. That will still happen for households earning $300,000 to $2 million - or single filers making $150,000 to $2 million - and now paying surcharge rates from 7.85 to 8.97 percent.
Millionaires making more than $2 million yearly in a household or more than $1 million annually as single filers will see their surcharge rate of 8.97 percent slip to 8.82 percent.
Cuomo said he hopes to appoint a bipartisan commission to study the tax system, its fairness and ways to stimulate growth, and otherwise leave it alone next year.
