Massive Tax Increases Are Coming to New York State

This is how government operates.

New York state tax revenues are way down because of the lockdowns and so the government solution is to tax the rich, that is tax the productive.

A proposal before the NY senate proposes a 3% income tax rate increase (aimed at profit over $5 million). This would increase the tax rate from 6.5% currently to 9.5% - an almost 50 percent increase. 

The Assembly proposes a 18% "surcharge" applied to corporate franchise taxpayers, corporate utility taxpayers and insurance taxpayers. The Assembly increase would for those impacted to increase the rate by18% going from 6.5% to approximately 7.67%.

But that is not all.

Another corporate tax change is to reinstate the Capital Base Tax. The Senate proposes a .125% rate. The Assembly proposes a. 15% rate. 

The most significant revenue raiser in these proposals is the Personal Income Tax Increase (PIT). The Senate PIT increase imposes 3 permanent additional income tax brackets: 9.85% for income between $2.155 and $10 million, 10.85% for income between $10 and $50 million and the top rate (over $50M) raises to 11.85% from 8.82%. The Assembly PIT proposal also imposes 3 additional tax brackets: 9.85% for income between $2.155 and $5 million, 10.85% for income between $5 and $25 million and the top rate of 11.85% begins at $25 million.

In addition, both Senate and Assembly proposed a Capital Gains Tax. The Senate proposes a 1% surcharge on capital gains income of taxpayers with incomes over $1.6M (single) /$2.155M (married). The Assembly proposes a 1% surcharge for taxpayers triggered at more than $1 million in income.

The Senate increases the tax rate and sets the top rate at 18% for taxable estates valued at $10.1 million or more. The Assembly increases the top estate tax rate to 20% for taxable estates valued over $10.1 million.

Both the Senate and Assembly have proposals to make mezzanine debt and preferred equity investments subject to the Mortgage Recording Tax.

Additional Revenue proposals

The Senate also proposes decoupling from Opportunity Zones for federal purposes and to increase LLC filing fees. The Assembly proposes a pied à terre tax in NYC. There would be an additional state tax surcharge on non-primary residences valued over $5 million.

How can this not drive more corporations out of the state?

-RW