stephanie
03-29-2009, 11:57 AM
By NICHOLAS CONFESSORE
Published: March 28, 2009
Gov. David A. Paterson and leaders of the Legislature have reached a deal to temporarily raise taxes on New York’s highest earners in order to close the state’s yawning budget deficit, lawmakers and officials involved in the talks said on Saturday.
The new plan, which would expire after three years, would represent the largest state income tax increase in recent history, significantly larger than the surcharges imposed from 2003 to 2005, when the state last faced a major recession.
The plan would raise $4 billion a year by creating two new tax brackets, the highest one affecting those who earn $500,000 or more. If approved by rank-and-file lawmakers in the Assembly and State Senate, the tax increases would be a major victory for unions and liberal advocacy groups and a signal of the new balance of power in Albany, where Democrats won control of both houses of the Legislature and the governor’s office in last year’s election.
Although the proposed tax has been called a “millionaires’ tax,” it would affect those with incomes starting at $300,000, who would be taxed at a rate of 7.85 percent. The highest bracket would carry a tax rate of 8.97 percent — the same as New Jersey’s current highest rate.
Officials said that Mr. Paterson, who has argued for months that new income taxes should be a last resort in balancing the budget, accepted the plan after winning significant spending cuts in areas like health care and education.
Mr. Paterson’s willingness to accept the new taxes reflects, in part, how rapidly the state’s finances are deteriorating. Since proposing his budget in December, projected tax revenues for the fiscal year beginning April 1 have dropped by $3.2 billion, while rising Medicaid caseloads will cost $750 million more than originally projected for this year and next year. That shift has left Mr. Paterson and lawmakers with little choice but to employ every possible mechanism to shrink budget gaps.
But the deal also reflects the leverage held by Sheldon Silver, the powerful Assembly speaker, over both Mr. Paterson, whose public approval ratings are low, and Malcolm A. Smith, the Senate leader, whose 32-to-30 Democratic majority has proved difficult to steer.
read it all here.
http://www.nytimes.com/2009/03/29/nyregion/29tax.html?_r=1
Published: March 28, 2009
Gov. David A. Paterson and leaders of the Legislature have reached a deal to temporarily raise taxes on New York’s highest earners in order to close the state’s yawning budget deficit, lawmakers and officials involved in the talks said on Saturday.
The new plan, which would expire after three years, would represent the largest state income tax increase in recent history, significantly larger than the surcharges imposed from 2003 to 2005, when the state last faced a major recession.
The plan would raise $4 billion a year by creating two new tax brackets, the highest one affecting those who earn $500,000 or more. If approved by rank-and-file lawmakers in the Assembly and State Senate, the tax increases would be a major victory for unions and liberal advocacy groups and a signal of the new balance of power in Albany, where Democrats won control of both houses of the Legislature and the governor’s office in last year’s election.
Although the proposed tax has been called a “millionaires’ tax,” it would affect those with incomes starting at $300,000, who would be taxed at a rate of 7.85 percent. The highest bracket would carry a tax rate of 8.97 percent — the same as New Jersey’s current highest rate.
Officials said that Mr. Paterson, who has argued for months that new income taxes should be a last resort in balancing the budget, accepted the plan after winning significant spending cuts in areas like health care and education.
Mr. Paterson’s willingness to accept the new taxes reflects, in part, how rapidly the state’s finances are deteriorating. Since proposing his budget in December, projected tax revenues for the fiscal year beginning April 1 have dropped by $3.2 billion, while rising Medicaid caseloads will cost $750 million more than originally projected for this year and next year. That shift has left Mr. Paterson and lawmakers with little choice but to employ every possible mechanism to shrink budget gaps.
But the deal also reflects the leverage held by Sheldon Silver, the powerful Assembly speaker, over both Mr. Paterson, whose public approval ratings are low, and Malcolm A. Smith, the Senate leader, whose 32-to-30 Democratic majority has proved difficult to steer.
read it all here.
http://www.nytimes.com/2009/03/29/nyregion/29tax.html?_r=1