(The Center Square) – New York state’s abysmal April tax receipts have sparked discussions in Albany about potential tax increases.
State Comptroller Thomas DiNapoli announced Friday that state revenue for last month came in at $3.7 billion – far below the $11.6 billion collected in the same month in 2019. The dramatic decline reflects the impact of shutting down all but essential businesses in an attempt to slow the spread of COVID-19, as well as the postponement of several tax payment deadlines.
“New York is facing economic devastation not seen since the Great Depression,” DiNapoli said in a news release. “New York and other hard-hit states need the federal government to step up and provide assistance, or the state will have to take draconian actions to balance its budget. We need Washington to set aside the partisan bickering and deliver substantial relief to New Yorkers now.”
But discussions are taking place among lawmakers that ask the question – what if Washington doesn’t come through with state budget relief? Or what if relief comes but is far short of filling the gap?
Enter the tax proposals.
According to Newsday, bills that would seek to raise new revenue include legislation to introduce a stock transfer tax, taxes on expensive Manhattan real estate, taxes on private equity and hedge fund managers, increased corporation taxes and tax hikes on CEOs of big corporations. Another proposal would raise taxes on those who earn more than $5 million.
Assembly Minority Leader Will Barclay criticized the idea that tax hikes could be part of the solution to closing what’s projected to be a $13 billion budget gap this year.
“New York State isn’t going to tax its way into a long-term, sustained economic recovery,” he said Monday on Twitter. “Making the state’s tax climate even more unappealing than it already is will send even more NYers running for the exits.”
Meanwhile, a recent story published by The Street aimed to show which states have the highest taxes across a variety of categories, and it found that New York is already near the top in several types.
The Empire State came in ninth in personal income tax and highest in the nation in combined sales and income taxes.
A Tax Foundation analysis found that New York is the eighth-most dependent state on income taxes, at 31.7 percent of state revenue. The economic analysis organization argues that states should diversify their revenue streams to be more resilient in tough times.
“As we’ve pointed out in the past, a state’s combination of tax sources has implications for its revenue stability and economic growth,” the foundation’s Janelle Cammenga wrote. “Income taxes tend to be more harmful to economic growth than consumption taxes and property taxes. Income taxes fall on labor and savings, while consumption taxes, like the sales tax, fall on what people spend instead of what they earn.”