- Cuomo’s 2022 budget includes some unprecedented tax implications, especially for New York City (NYC) residents
Earlier in January, New York State (NYS) governor, Andrew Cuomo, released a statement introducing his 2022 fiscal year budget.
Cuomo’s budget proposed a temporary wealth tax that could bring some urbanites to the highest state-and-local combined tax rate in the nation: 14.7%. An almost 15% income tax rate certainly sounds frightening, but fortunately, the threshold for the wealth tax starts at incomes over $5 million. The middle-class can rest assured… for now.
Cuomo’s wealth tax—estimated to increase state funds by $1.5 billion—was presented as part of his trifold solution to finance NYS debt. The budget aims to raise revenue, cut expenses and borrowing, and cover the state’s $15 million deficit.
Of course, this whole budget hinges that $15 million shortage and whether NYS will receive any aid from Biden’s bank in Washington. The president’s proposed American Rescue Plan set aside $350 billion for state and local aid, but how much of that is New York going to see? According to Cuomo, “The budget is dependent on that number.”
Robert Mujica, the governor’s budget director, has been vocally against such radical reforms, saying that taxing the rich at such high rates would drive them out of the state, dwindling one of New York’s fundamental sources of income.
In any case, Cuomo’s proposal is both progressive and substantial. It may solve the immediate shortfall, but how will it sustain the state economy as we emerge from this pandemic-induced recession? Andrew Rein, president of the Citizens Budget Commission, said to the New York Times, “No matter the level of federal aid, the state should be pursuing structural spending reforms to ensure that its finances are stable coming out of the recession.”
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Sincerely,
Devin McQuillan
Associate, Creative Solutions
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