Federal, state income tax spikes will hammer NY’s top earners
COVID-ravaged New York faces new plague of tax increases
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New York state income tax filing extended to May 17
State and fed tax hikes would be a double whammy pushing more New Yorkers to Florida
High-income New Yorkers will face a double whammy from both state and federal tax collectors if President Joe Biden and Albany Democrats have their way.
A combination of new state income tax brackets and higher rates would put the biggest earners — households taking in $2 million-plus annually — on the hook for tax bills totaling more than half of their income, experts said.
“It’ll be the straw that broke the camel’s back,” State Sen. Andrew Lanza (R-SI) told The Post. “It’s an increase on people who are already paying more than taxpayers anywhere else — and getting less in return.”
The $7 billion in new taxes proposed last week in the state Senate’s budget includes an almost 12 percent rate increase, from 8.82 to 9.85 percent, on incomes over $1 million. The Democrats’ tax plan would also add new state tax brackets of 10.85 percent on $5 million incomes and 11.85 percent on those earning $25 million or more.
“At some point people may feel it’s just too much for them,” said economist Alexander Heil of the Citizens Budget Commission.
Meanwhile, Biden’s plan to boost the top federal income tax rate to 39.6 percent for couples earning more than $400,000 a year — as compared to the 37 percent top rate in place since 2017 — would inflate the tax burden of at least 443,000 New York State households.
Add in New York City’s 3.876 percent income tax, and singles with $1 million incomes will see top tax rates of 53.3 percent, with $5 million earners in the five boroughs hit by 54.3 percent rates.
Thanks to the marginal tax system, only the wealthiest would actually shell out that big a chunk of their incomes. The government charges a lower rate on earnings up to a certain threshold — in New York state, for example, it’s 4 percent on the first $17,150 — and progressively higher rates on amounts earned in the bigger brackets.
Still, the highest rollers taking home $25 million or more could end up owing 55 percent of their income to federal, state, and city tax collectors.
And since New York’s top 1 percent generates 44 percent of the state’s tax revenue — with each $10-million-plus earner kicking in an average of $1.2 million to state and city coffers — a sudden tax increase could mean a big economic risk.
“Already I see friends I grew up with leaving. They say enough’s enough,” Lanza said. “This budget, if it passes, puts us on a very dangerous and downward trajectory.”
Two senior corporate attorneys: $557,572
Total taxes now: $194,995 = 35% of salary
Total taxes coming: $206,253 = 37% of salary
Manhattan-based CEO: $4,098,159
Total taxes now: $1,913,032 = 47% of salary
Total taxes coming: $2,109,878 = 51% of salary
TV actor: $12,000,000
Total taxes now: $5,839,931 = 49%
Total taxes coming: $6,422,388 = 53.5%
NBA or MLB star athlete: $36,000,000
Total taxes now: $17,625,058 = 49%
Total taxes coming: $19,802,090 = 55%
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