New York Could Hike Personal Taxes To Highest In US - Report

Tom Burroughes

6 April 2021

Governor Andrew Cuomo and New York State legislative leaders were close to a budget agreement today that would increases personal income taxes, becoming the highest of their kind in the US, according to the New York Times.

A shift leftwards in the New York legislator, and Cuomo’s “waning influence”, as the NYT said, mean that Cuomo’s long-standing reluctance to hike taxes could be overcome. Cuomo has feared that higher taxes would drive business from the state.

If enacted, the deal would raise income and corporate taxes to generate an extra $4.3 billion a year and would potentially legalize mobile sports betting to raise an additional $500 million in new tax revenue, the newspaper said.

The story chimes with how wealth managers have told Family Wealth Report that tax hikes, both at federal and, in some cases, state level are expected in the wake of the COVID-19 pandemic.

The report said that under the proposed new tax rate in New York, the city’s top earners could pay between 13.5 per cent and 14.8 per cent in state and city taxes, when combined with New York City’s top income tax rate of 3.88 per cent. This is more than the top marginal income tax rate of 13.3 per cent in California, at present the highest in the nation.

As already noted, President Joe Biden is expected to increase taxes on US high-earning individuals.

In early March, The Heritage Foundation, a conservative think tank, put Singapore at first place in its 2021 Index of Economic Freedom, followed respectively by New Zealand, Australia, Switzerland, Ireland, Taiwan, the UK, Estonia, Canada and Denmark. The US, at 20th, has plummeted to its worst-ever score, caused by “out-of-control spending and a loss by Americans in the even-handed rule of law,” the report said. The US recorded a score of 74.8, lower than its 2020 score, and dropped to 20th place globally from 17 in the year prior. The US remains “mostly free” and its regional ranking is unchanged at third out of 32 countries that were graded in the Americas region, behind Canada and Chile. According to the editors, out-of-control government spending has put US fiscal health at grave risk.