Will New York raise taxes on the rich? Why Cuomo says it’s not needed

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ALBANY – The federal stimulus aid coupled with better than expected revenue into New York’s coffers should negate the need for higher income taxes on the rich, the Cuomo administration is contending.

Robert Mujica, the state budget director, said late Monday that the New York government has about $5 billion more in revenue than when Gov. Andrew Cuomo presented his budget in January, meaning any proposed cuts in spending would be restored and the budget due April 1 “wouldn’t require any significant level of tax increases.”

The position by Cuomo and his staff will set off a fight with the Democratic-led Legislature, which has proposed massive tax increases on the wealthy and on Wall Street to bring in as much as $8 billion a year to fund record increases in school aid, business assistance and health care.

Mike Murphy, a spokesman for Senate Democrats, called it “amazing” that Cuomo’s office “found” $5 billion in new revenue after Democrats proposed the tax increases.

“Our position remains the same: We need to ensure all New Yorkers are protected, and we can pass a budget that doesn’t rely on one shots and austerity but creates long term equity,” he said in a statement.

The tax fight ahead in New York

Gov. Andrew Cuomo and lawmakers are at odds over whether to increase taxes on the wealthy in this year's budget.

Cuomo has long resisted Democrats’ attempts to raise taxes on the rich, but was amenable to it earlier this year when the state had a $15 billion deficit over the next two years mainly due to the COVID-19 pandemic.

The state, though, is now getting $12.6 billion from the stimulus deal passed by Congress earlier this month, negating much of Cuomo’s plan to raise taxes and make cuts to programs and services.

Plus, the economy has improved better than expected amid the pandemic, Mujica said.

“So as of right now we have the resources necessary so that there would be no cuts in the Governor’s Budget so you wouldn’t require any significant level of tax increases to pay for the restorations,” Mujica told reporters on a conference call.

“So now the conversation is to go to what additions to the budget we have and then how you finance those additions.”

Cuomo and lawmakers will start budget negotiations in earnest in the coming days in hopes of having an on-time budget deal.

And legislative leaders will negotiate with a stronger hand than in past years: Cuomo is embattled over twin scandals. The state Assembly and the Attorney General’s Office are investigating him over sexual harassment allegations by former aides, and federal prosecutors are investigating COVID-19 deaths in nursing homes.

Also, the Legislature has enough Democrats to override any of Cuomo’s vetoes, if it came to that.

More:Cuomo’s budget would hike taxes on wealthy if Washington doesn’t pay

More:Current employee accuses Andrew Cuomo of unwanted flirtations, ogling

What is being discussed over taxes

Gov. Andrew Cuomo speaks at Grace Baptist Church, a new pop-up vaccination site, in Mt. Vernon, N.Y., Monday, March 22, 2021. Cuomo was there to encourage all people to get vaccinated, especially those in underserved communities that were the most effected by the pandemic.

Democrats have proposed raising taxes on those earning more than $1 million a year in a bid to raise $4 billion for the state’s coffers.

Cuomo said the state has three categories to address in the budget: restoring the cuts he proposed in January; using federal aid to fund one-time COVID-related needs; and adding “additional needs identified by the Legislature above and beyond the COVID response measures provided for by the feds.”

Progressive groups are urging lawmakers to stick to their plans.

“Millions of New Yorkers are struggling to feed their families and make rent, as the state’s billionaires continue to grow wealthier,” Rebecca Bailin, who is leading the “Invest In Our New York” campaign among activist groups, said in a statement Tuesday.

More:New York lawmakers propose tax increases on the rich. Here’s who would pay up

More:Stimulus checks, child care help: What’s in the federal package for New Yorkers

Meanwhile, 250 companies and business groups across the state on Tuesday wrote to legislative leaders urging them to nix any tax increases, saying it would hurt New York’s competitiveness and potentially force industry to leave the state.

Already, New York has lost more than 1 million people over the past decade, the most of any state in the nation.

“This is not about companies threatening to leave the state; this is simply about our people voting with their feet,” the letter from businesses said.

“Ultimately, these new taxes may trigger a major loss of economic activity and revenues as companies are pressured to relocate operations to where the talent wants to live and work.”

Joseph Spector is the Government and Politics Editor for the USA TODAY Network’s Atlantic Group, overseeing coverage in New York, New Jersey, Pennsylvania, Maryland and Delaware. He can be reached at JSPECTOR@Gannett.com or followed on Twitter: @GannettAlbany

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