For Release — February 19, 2009
Business Council warns Personal Income Tax bill devastating to economy
ALBANY— “The massive increase in the Personal Income Tax (PIT) proposed in Senate Bill-2021 would devastate New York's economy and undermine our chances for recovery from this deep recession,” said Kenneth Adams, president & CEO of The Business Council of New York State, Inc.
“This bill would impose a permanent $6 billion increase in the state's personal income tax levy. The burden would not just fall on “millionaires”. This new tax burden would hit married couples filing jointly with an income of $250,000,” added Adams, “And it would hit thousands of small businesses that pay personal income taxes as Subchapter S Corporations."
This bill would leave New York with the second highest maximum income tax rate in the nation at 10.3 percent. That is 60 percent higher than the median top rate for all states, not including the seven states with no PIT. It is also much higher than the top rate in neighboring states, including Pennsylvania at just over three percent and Connecticut and Massachusetts at approximately five percent.
“New York's problem is too much spending. New York has a structural budget imbalance caused by the downsizing and reorganizing of the financial services sector. This imbalance cannot be cured with higher taxes. Instead the state must lower spending to reflect our new revenue reality,” said Adams.
From FY 2000 to FY 2008, the state funded budget grew by nearly two and a half times the rate of inflation. If the budget had grown at double the rate of inflation the FY 2008 budget would have been $4 billion smaller and our current budget gap would have been much more manageable.
Despite arguments to the contrary by this bill's supporters, New York's PIT is already progressive. The top four percent of taxpayers pay 55 percent of personal income taxes. The top 25 percent pay 96 percent of the levy.
“Increasing New York's personal income taxes to rates that have not been seen since the Rockefeller era will send a terrible message to entrepreneurs and business owners that they are better off moving their businesses and workers to other states,” said Adams.