GrowingTogetherNY: A Better Choice for a New NY Fixing Our Upside-Down Tax SystemWhy We Need to Extend the Income Tax Surcharge on the Wealthiest New Yorkers Ron Deutsch Executive Director
My presentation will explore: How cutting top income tax rates over the last 30 years has contributed to New York State having the greatest income disparity in the nation. How the income tax surcharge on the wealthiest New Yorkers is the right medicine to fix this problem Why we need to close corporate tax loopholes Why a Tax Cap is the wrong prescription for the property tax problem in NYS Why a Circuit Breaker is the right prescription to our property tax problems
NYS Instituted a Temporary Income Tax Surcharge on High Income Earners for 2009-2011 • Current Personal Income Tax Rate Structure - with temporary top rates (joint filers): 2009-2011 • 4% on income under $16K • 4.5% on income between $16K and $22K • 5.25% on income between $22K and $26K • 5.9% on income between $26K and $40K • 6.85% on income between $40K and $300K • 7.85% on income between $300K and $500K • 8.97% on income over $500K
TOP 10 REASONS TO OPPOSE PROPERTY TAX CAPS • Tax caps WILL NOT lower anyone’s taxes • These are “caps” not cuts. • Tax caps WILL NOT ensure that residents’ individual tax bills won’t go up more than a small amount each year • Tax caps will do nothing to prevent the property tax increases due to reassessments and tax cap overrides and new fees for essential services which are common place in locales with tax caps. • Tax caps WILL NOT help anyone who can’t afford their current property taxes • People who are unable to pay their property taxes will get no relief for their current situation. • Tax caps WILL make the local revenue system more regressive • Tax caps can exacerbate disparities across the state leaving lower-income communities even worse off relative to their higher-income counterparts. • Tax caps WILL NOT change the main drivers behind higher property taxes • Caps on property taxes do not change the rapidly rising costs facing localities. Tax caps cannot slow the increase in the cost of fuel/energy, for example, which reflects forces outside of the control of local officials. • Tax caps WILL NOT change the demand or need for local services • While residents continue to need all the current local services they received prior to the initiation of tax caps in many circumstances, these caps do not allow local governments to continue their current level of public services, much less make any improvements demanded by residents. State aid to localities may be promised to help localities but this promise is unlikely to be sustained over time, especially during economic downturns such as is already happening in the current fiscal environment. • Tax caps WILL impair public safety • Tax caps greatly hinder localities’ ability to maintain the current level and quality of public safety by limiting the local’s ability to pay for police and firefighters. • Tax caps WILL impair the quality of K-12 public education • Tax caps have shown to be the main agent in the deterioration of the public school systems in many states that have imposed property tax caps. • Tax caps WILL lead to deteriorating streets and roads • Tax caps in locales across the country have resulted in poorly maintained and often times dangerous street and road conditions. • TAX CAPS WILL NOT SOLVE THE PROBLEM OF HIGH PROPERTY TAXES • THEY WILL COMPROMISE THE QUALITY OF LIFE IN NYS
TOP TEN REASONS TO SUPPORT A CIRCUIT BREAKER 1 The Circuit Breaker IS THE ONLY property tax relief mechanism that will actually reduce taxes for overburdened households. Property tax circuit breakers will, like electrical devices that shut off electric power to prevent circuits from overloading, prevent taxes from overloading a family’s budget. 2 The Circuit Breaker WILL offer targeted relief to people who need it the most. Property tax circuit breakers reduce the property tax liability for individuals whose property tax payments represent a large portion of their family’s income. 3 The Circuit Breaker IS NOT a “one size fits all” approach Property tax circuit breakers relief formula will take into account both property taxes and income to determine the amount of relief/rebate residents receive. 4 The Circuit Breaker WILL help create an equitable approach to property tax relief A basic tenet of fair taxation is that taxes should be reasonably linked to the taxpayer’s ability to pay. Currently the low- income earners pay the highest % of their income(30%) in property taxes, the middle-income earners pay 2.4% of their income in property taxes while the highest income earners pay the lowest %(0.8) of their income in property taxes. A circuit breaker will result in property tax relief for the most overburdened lower and middle income earners. (Many middle income taxpayers pay double digit percentages of their income, as much as 40% and more, in property tax on their home.)" 5 The Circuit Breaker WILL help prevent the deterioration and allow improvement of local, essential services such as public safety, public K-12 education and maintenance of streets and roads in communities across the state Under a circuit breaker, property tax payments to localities will not be cut thus providing the needed resources for local governments to provide and improve services to their residents and businesses 6 The Circuit Breaker WILL also protect renters whose property taxes are deemed too great Property tax circuit breakers will use a standard formula to determine the amount of property tax that is passed on by the landlord to the renter in the form for rent; 31% of households are renters while 57.4% of households in poverty are renters 7 The Circuit Breaker WILL protect seniors and others living on a fixed income from being driven out of their homes due to unaffordable increases in property taxes After living in their homes and supporting their communities for decades senior citizens are being forced to leave their homes due to affordable increases in their property taxes. The circuit breaker will allow individuals on fixed incomes to stay in their homes. 8 The Circuit Breaker WILL protect the unemployed who are facing property taxes that they could once pay but are temporarily unable to do so. Given the current unemployment rate in the country record numbers of people are finding themselves out of work and unable to afford their property taxes for the first time in their lives. The circuit breaker will provide tax relief for those caught in this temporary economic hardship. 9 The Circuit Breaker WILL ensure that escalating property reassessments will not affect property tax relief for all who qualify. The circuit breaker will establish a maximum % of income that a qualifying household is expected to pay and if the property tax bill exceeds this limit the household will receive tax relief regardless of the property reassessment. 10 The Circuit Breaker has a five year residency requirement to control costs.
Governor Cuomo’s SOS example of a person that would be helped by his tax cap misses the mark: In Governor Cuomo's State of the State speech he made an example of Geraldine Sullivan, a lovely 81 year young resident of Monroe County. She is retired and living on Social Security and her property taxes have gotten to the point where she can no longer afford them. She is much like the hundreds of thousands of New Yorkers paying double digit percentages of their income in property taxes. In fact, the Governor noted that she had to take a job as her local school as a lunch monitor for $10,000 a year just to pay her property taxes. Governor Cuomo's solution to her problem – make sure her taxes continue to rise under a property tax cap. Not only will her property taxes rise but poor Geraldine will likely lose her job as a lunch monitor and see a reduction in services like meals on wheels and perhaps see her senior center shut down as a result of a property tax cap. Making sure her property taxes don’t exceed a fixed percentage of her income – a circuit breaker – is the right solution to her problem. Only by tying property taxes to income can we provide people with the property tax relief they desperately need.
Ode to Geraldine Twasin Governor Cuomo's State of the State, That the property taxcap he lauded as great. To Geraldine Sullivan he said never fear, the solution to your problem I have it right here. At 81 years young she took an extra job, as a school lunch monitor serving food to the young mob. She worked her old fingers right to the bone, to pay her property taxes andstay inher home. When the cap was passed she was happy as could be, Until her tax bill came and what she did see? Her taxes went up and her smile turned to a frown, She cried and yelled ”I thought my taxes would go down.” The very next day more bad news hit her like a slap, her lunch monitor job was lost cause of that cap! Cut backs were required, schoolstightened their belts, Now she was broke, would she go hunting for pelts? She wondered how she could have been taken in by this man, She wondered if his cap was nothing more than a scam? Her taxes went up and herjob wasjust cut, Now she was getting thrown out on her butt. Geraldine didn't have enough money to get food at thestore, and her senior center closed and meals on wheels was no more. The solution is here but the Governordismisses it as obscene, but we know only a circuit breaker would have saved poor Geraldine.