Hungry for revenue, Albany eyes new tax ideas: Gold? Crypto? Yachts?

ALBANY — When it comes to taxes in a state budget, it isn’t just about incomes, property, corporations or general sales.

It’s also about gold bullion. Helicopter rides. Yachts. Nicotine pouches. Crypto mining.

It takes a lot to pay for a $260 billion state budget. Including creativity.

New Yorkers saw some of that as lawmakers unveiled competing budget proposals over the past six weeks. Gov. Kathy Hochul presented some ideas in late January; the State Senate and Assembly countered with their versions this week.

Now, they are supposed to negotiate a final budget by April 1, the start of New York’s fiscal year.

Long Island’s most veteran state legislator said the nature of the state budget process — the governor opens, the Senate and Assembly counter — always generates new and interesting revenue ideas. But the need is perhaps accented this year because the Trump administration has reduced aid to New York State by roughly $10 billion.

"One of the aspects of this particular structure is it lends itself to analysis and creativity," Assemb. Charles Lavine (D-Glen Cove) said. "At a time when we are losing billions and billions of dollars from our federal partners, it is very appropriate that we come up with some ideas that we might not traditionally want to consider."

He added: "There are a few factors that are a surprise to me."

Gold 

Among the new ideas: A tax on purchases of gold bullion of $1,000 or more. 

With some rushing to buy or sell gold, the Senate has proposed ending the current sales tax exemption.

"If you buy gold bullion, you don’t pay sales tax now," Sen. Liz Krueger (D-Manhattan) said. "You pay sales taxes on virtually everything you buy every day. Why not pay sales tax on gold bullion?"

Ending the exemption on sales tax would generate around $600 million per year in state revenue, the Senate estimated. The Assembly didn’t include the proposal in its budget bill but Speaker Carl Heastie (D-Bronx) called the measure a "great idea."

Crypto

The Assembly advanced a new idea to tax crypto mining, which requires vast amounts of computing power and electricity to rapidly solve math problems to essentially create digital currencies that can be traded and verify those transactions, a necessary step since crypto is decentralized.

Among the criticisms is that crypto miners add a huge burden on the power grid without paying their share of the costs, said Assemb. J. Gary Pretlow (D-Mount Vernon), chair of the powerful Assembly Ways and Means Committee.

He said crypto miners currently are paying lower power rates than households and the new tax would apply to those using "2.5 million kilowatt-hours of electricity or above — that’s a lot of electricity."

"There are no public benefits associated with crypto mining," Pretlow said when debating Republicans as the Assembly approved its version of the state budget. "They don’t really have any employees. There’s essentially one person doing it."

Assemb. Philip Palmesano, Pretlow’s Republican counterpart on the committee, generally thinks the state is taxing and spending too much and says the tax could hurt some companies that both generate power for the grid and do crypto mining, like Greenidge Generation in Dresden, a natural gas facility in his Assembly district.

"When the grid needs the power, they shut down the crypto, the bitcoin mining, and they provide power to the grid," Palmesano (R-Corning) said.

Other ideas

Among some of the other offbeat tax ideas in budget proposals from Hochul, the Senate or Assembly:

• Yachts. The Senate proposed ending the sales tax exemption for boats valued at $230,000 or more. Of note, it’s an idea that’s been around a decade but hasn’t won approval yet. "There aren’t many private yacht owners in New York and it is consistent with the idea of taxing luxury items," Krueger said.
• NYC "mansions." The Senate would raise the tax on sales of property with values of $5 million or more. It says the measure would raise $321 million annually for a city that is trying to close a multibillion-dollar budget hole.
• Noisy helicopters. The Senate wants to slap a fee on "nonessential" helicopter rides around New York City — think wealthy residents going to the airport or sightseeing tourists. The tax could amount to $50 per passenger or $200 per trip.
• Nicotine pouches. Hochul wants to tax these nicotine alternatives (which cost $5-10 per container) like cigarettes (around $15 per pack). Backers say besides generating revenue this would encourage people to quit nicotine, just like high tobacco taxes have corresponded with a drop in smoking in New York.

Palmesano and others think a tax on nicotine pouches would backfire, giving smokers less incentive to choose nicotine pouches over cigarettes. He said: "It’s going to be a disincentive for some people to make that switch."

By Yancey Roy

yancey.roy@newsday.com@yanceyroy