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TOPIC: State tax hike on rich will hit LIers hard

Taxed out

Date: Mon Mar 30 6:02 AM, 2009

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Observers: State tax hike on rich will hit LIers hard BY REID J. EPSTEIN reid.epstein@newsday.com 8:19 PM EDT, March 29, 2009 Nowhere in New York will the state budget's tax hike on the rich impact more people than on Long Island, political and economic observers said Sunday. The budget creates two new income tax brackets: 7.85 percent for households earning between $300,000 and $500,000 annually, and 8.97 percent for those earning more than $500,000. Previously, all families earning $40,000 or more paid the same state income tax rate of 6.85 percent. "I don't think there would be anybody more affected than Long Island," said Long Island Association president Matt Crosson. "It's clearly very negative for Long Island in general and particularly for the recovery of our economy here." For families earning more than $500,000 annually, the budget amounts to a 31 percent increase on state income taxes. Assemb. Charles Lavine (D-Glen Cove), whose district covers some of the poshest real estate on Long Island, called the tax hike "the choice of the lesser evils. "There is no more palatable choice," Lavine said. "It's problematic, and this is the time for shared suffering and we are all going to be suffering." Like the temporary post-Sept. 11 tax increase, this one is designed to expire after three years, when the state would presumably be past the current economic recession. But Crosson and LIA economist Pearl Kamer said any significant tax increase could lead to some New Yorkers and Long Islanders, especially those close to retirement age, fleeing the state for another with a more hospitable tax climate. "We're simply going to lose some of our wealthier households," Kamer said. "Those who are tied to New York State or Long Island by virtue of a career or family obligation will simply pay the tax. But at the margin are those who are near retirement or planning retirement, who could reach the tipping point and say, 'I'm out of here.' " There are no reliable figures on how many Long Islanders will fit into the tax brackets, but 2000 U.S. Census figures showed 11.9 percent of Nassau households and 7.9 percent of Suffolk households make $200,000 or more. "It's going to hit people on Long Island, areas of New York City and Westchester substantially harder, and that's because we are the wealthy part of the state," Lavine said. "It is certainly not going to adversely affect the western part of the state, upstate and all those areas that are in economic crisis." Copyright © 2009, Newsday Inc. __________________

governor

Date: Mon Mar 30 8:11 AM, 2009

RE: State tax hike on rich will hit LIers hard

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State Legislature agrees to budget

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(03/29/09) ALBANY - Assembly Speaker Sheldon Silver said late Saturday that New York's Legislature has agreed to a 2009-10 state budget that will keep school funding flat, restore aid to New York City, and includes increased income tax rates for wealthier New Yorkers.

The agreement announced just before midnight also includes some restoration of proposed cuts in health care and in higher education and includes a bigger bottle law, putting nickel deposits on bottled water under the measure that currently covers only carbonated drinks.

The powerful Manhattan Democrat tells The Associated Press that the spending plan will likely be adopted Tuesday, resulting in an on-time budget.

There is no total yet for the budget but it will include $5 billion in spending cuts and use $5 billion of the federal economic stimulus package to help fill some of the gaps created by rejecting increases in some other taxes and fees.

The temporary income tax increase is projected to provide the state $4 billion in revenue and will end after three years, Silver said.

The deal will add two more tax rates over the current highest rate of 6.85 percent. New Yorkers making more than $300,000 but less than $500,000 would face an income tax rate of 7.85 percent. New Yorkers making more than $500,000 would see a rate of 8.97 percent.

Assemblyman Steven Englebright (D- Setauket) told News 12 Long Island that the budget is a hard choice between raising taxes on some people or what he calls terrible cutbacks.

“Of course, no one really likes new taxes,” he says.

The measure is a compromise of one first pushed by labor unions representing health care workers, teachers and other public employees to avoid cuts to their funding. Proposals on the table last week included a permanent tax rate increase, an increase in the tax rate for all making more than $250,000 a year, and a higher rate still for those making more than $1 million a year.

AP wire services were used in this report.

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Observers: State tax hike on rich will hit LIers hard