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Millionaires' tax renewal may be risk for Cuomo

Gov. Andrew M. Cuomo delivers a State of

Gov. Andrew M. Cuomo delivers a State of the State and budget message at Stony Brook University. (Feb. 25, 2013) Photo Credit: Ed Betz

By renewing New York's "millionaires' " tax, Democratic Gov. Andrew M. Cuomo risks alienating independents, a growing force on the national political stage whose votes he would need for a possible 2016 presidential campaign, analysts said.

His strategy, announced last week in a budget agreement with state legislative leaders, also risks cementing Republican criticism of him as too eager to spend -- but could impress liberal Democrats who are likely to vote in party presidential primaries, experts said.

"This is very much a popular tax in the Democratic Party," said George Arzt, a Democratic consultant. "This is where you get elected -- on the Democratic side, not the Republican side."

Kathryn Wylde, president of the Partnership for New York City, said members of her business group were "blindsided" by Cuomo's decision to extend the tax -- which was set to expire in 2014 -- until 2017.

Independents are much more powerful in other states that are not dominated by Democrats, and the nonaligned voters might prove skeptical, the analysts said.

"Independents I think are more concerned about higher taxes," said James Campbell, a University of Buffalo political science professor. "The independents are a little skittish about big government . . . Even if they are not footing the bill, perhaps they are a little bit disinclined toward raising taxes further."

The higher tax rate hits singles with annual incomes of $1 million or more and couples whose yearly income tops $2 million.

The $2 billion or so raised by the 32,000 filers who pay the millionaires' tax will fund a variety of programs, from aid for small businesses to STAR property tax relief that will help the middle class.

Renewing the tax one year early neutralizes a contentious issue before next year's gubernatorial and legislative elections.

But the extension hits New York's business community, which is struggling in a fragile economy and frustrated by the new accord that raises the minimum wage over three years.

E.J. McMahon, a senior fellow at the Manhattan Institute, a conservative think tank, said the tax extension sent a negative signal about the state.

"It's got a highly unstable, politicized tax policy and this does not bode well for New York's economy," McMahon said.

A Cuomo spokesman declined to comment.

The new millionaires' tax rate of 8.82 percent was born in the first week of December 2011, when Cuomo dropped his opposition to extending a temporary surcharge on the group to help solve a fiscal crisis.

Independents in New York State were evenly split about the new tax rates -- 36 percent approved and the same number disapproved -- according to a Dec. 20, 2011, Quinnipiac poll. Democrats approved of the new rates by 44 percent to 31 percent; Republicans disapproved by a narrow 38 percent to 36 percent margin.

The agreement last week on the millionaires' tax extension came on the heels of a new Quinnipiac survey that found that a majority of Republicans had just flipped from approving to disapproving of Cuomo's overall performance.

Douglas Muzzio, a public affairs professor at CUNY's Baruch College, said Republican legislators and the business community had no alternative but to work with Cuomo.

"You can get the emotional satisfaction of screaming about it, but is it [in] your self-interest to make an enemy of the governor?" Muzzio asked.

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