View PDF
Dear Legislator,
On behalf of the National Taxpayers Union (NTU) and our supporters across New York, I write to congratulate you on officially becoming a sworn member of the State Legislature. We wish you luck as you prepare to tackle major challenges impacting the constituents of your district, particularly on issues as they relate to overburdened taxpayers.
As you may be aware, a surcharge imposed on high-income earners is set to expire at the end of calendar year 2019. This misguided “millionaires tax” was originally established in 2009 as a short-term fix to help close a large budget deficit at the height of the financial crisis. Taxpayers were promised this tax increase would phase out after two years. However, lawmakers have since voted for its extension three times and it remains in place to this day. Permitting the surcharge on high-earners to lapse would be a productive first step in making the tax code fairer and more conducive to economic growth.
According to the New York-based Empire Center for Public Policy, the top one percent of taxpayers in the state generate more than 40 percent of state personal income tax receipts. Such a top-heavy dependence on a small, but significant group of taxpayers is incredibly risky and unsustainable for the long-term fiscal health of any state. Experts and data generally confirm that high tax rates incentivize wealthier residents to migrate to lower-tax jurisdictions like Florida, North Carolina, or Texas. Driving wealthy earners out of state will reduce revenues and shift the tax burden onto low and middle-income residents, or cause cuts to services that many New Yorkers rely on. Between 2010 and 2015, New York ranked in the bottom ten states for percentage growth of millionaire filers and lagged significantly behind the national average.
New York has a notorious reputation for wasteful spending and overtaxing its taxpayers. The Empire State has one of the highest top marginal income tax rates in the nation, among the highest property taxes, and an uncompetitive corporate tax rate and structure. This dangerous trifecta creates a perfect storm of fiscal calamity, stunting economic prosperity and population growth.
Compounding this problem is the concern that there may be an exodus of wealthy taxpayers due to the new federal cap on the deductibility of state and local taxes. Extending a millionaires tax would further exacerbate this already occurring problem, and even push out more of New York’s taxpayers, furthering shrinking the tax base and shifting a greater burden onto the rest of taxpayers. This federal cap should motivate lawmakers to consider comprehensive tax relief, spending reform, and stronger property tax caps.
Achieving these positive changes would go a long way toward improving the state’s harsh fiscal environment and spur development in economically troubled communities upstate and downstate. If New York is to prosper it today’s economy, where states compete for businesses and resident, it is essential that lawmakers deliver meaningful tax relief for all New Yorkers.
New York faces many fiscal challenges in the years ahead but you are in a position to bring tax relief to thousands of taxpayers across the state. Perhaps a “soak the rich” tax on the wealthy is politically expedient, but it would be a sound economic decision to avoid another extension of such a flawed policy. Thank you for your consideration of our views and we look forward to working with you over the course of this year to bring relief to millions of overtaxed New Yorkers.
Sincerely,
Thomas Aiello
Policy and Government Affairs Associate