The federal government is raining more than $100 billion on New York from the recent $1.9 trillion COVID-19 stimulus package. That includes $12.6 billion directly to state coffers and $9 billion to public schools.
Billions more could come from President Joe Biden’s proposed $2.2 trillion infrastructure bill, but that package also includes a corporate tax rate increase that will negatively impact many New Yorkers. Higher federal taxes don't push higher earners toward Florida or the Carolinas. Higher state taxes might.
With so much money flowing from Washington and federal tax hikes on tap, it’s a terrible time for state tax increases.
Yet that’s exactly what the progressive wings in the State Senate and Assembly are pushing. Worse, they’re combining proposed increases with irresponsible spending, like tens of thousands of dollars of benefits to each undocumented worker who claims lost wages to COVID-19. On the table are roughly $20,000 in retroactive payments without workers having to prove they're state residents or had jobs. The total price tag is $2.5 billion. In contrast, California is giving undocumented workers approximately $1,200, but only to those who have tax identification numbers and proof they were employed — one of several prudent ways to distribute emergency funding.
Supporters, not shy about their plans to redistribute wealth, demonstrated in Manhattan Wednesday with "Tax The Rich" signs. It’s a sure way to make the wealthy who pay most of the taxes flee and force those left behind to pay more to fill in the gaps. It’s also a prescription for a Republican resurgence.
The fact that some Democrats can’t see the danger of their caucus being driven by far-left advocacy groups after just three years in control of the State Senate is stunning. Eleven years ago, they gave control of the chamber back to the GOP because unpopular tax increases were rejected by suburbanites.
The $7 billion in state tax increases lawmakers want — Gov. Andrew M. Cuomo asked for $2.5 billion in his plan — was originally proposed because the pandemic sapped state revenues and Democrats were flexing after achieving a Senate supermajority in November. The concept is wrong and the tone ugly, as the left wing tries to scare and cancel moderates into going along. As one Assembly member said of these advocacy groups, "They’ve learned from the tea party how to light torches and sharpen pitchforks."
The proposed tax hikes include a jump on the highest income tax rate from 8.82% to 11.85%, a new capital-gains tax on those earning over $1 million annually, a tax on second homes owned in New York City, an estate tax hike from 16% to 20%, and a new corporate surcharge.
If we raise this money, we’ll spend it, but the plans on the table suggest we won’t spend it wisely. And when we desperately need money down the road, the opportunity to raise taxes again — and the wealthy people from whom we’d need to raise the revenue — might be gone.
Editor's note: A previous version of this edit said the federal government was providing $100 million to New York from the $1.9 trillion COVID-19 stimulus package. That number has been corrected.
— The editorial board