Friday, December 9, 2011
New York income tax cut….ummm, pants on fire!
"New NY tax bill hits
millionaires, helps middle" blared the New York Post on Dec. 7.
On the other hand, what if there is a tax cut, but only the wealthiest households actually got the big benefits? Think New York, and you're on the right track.
This week New York state politicos re-structured the state income tax, changing the previous flat rate tax of 6.85%. Yeah, if you're not a New Yorker, resume reading as soon as you stop coughing and gagging….
Now, the headline reporting described the revision as benefiting lower and middle classes, while the wealthiest New Yorkers would get "hit." Turns out the opposite is true.
ProPublica says tax change benefits the rich
See, for the last three years, New York has had a "temporary" surcharge of 1% on state income tax paid by households with income of $300,00-$500,00 (they paid 7.85% total), and a surcharge of 2.12% on households making $500,00 or more (they paid 8.97% total).
The new tax code does cut everybody's current tax rate. However, it ALMOST COMPLETELY ELIMINATES the surcharges.
So, here's how the "tax cut" benefits stack up for New Yorkers:
Household with $ 149,999 income: actual tax cut of $ 600
Household with $ 299,999 income: actual tax cut of $ 600
Household with $ 499,999 income: actual tax cut of $ 5,000
Household with $ 1,999,999 income: actual tax cut of $ 42,400 (yeah, that's right!)
Households with income over $2 million would see a relatively small tax cut of $1,500 for every $1 million of income.
A New York family making just under $2 million will keep $42,400 in their pockets--that's more than 5 times the percentage reduction offered to households making less than $150,000, and, outrageously, 265 times the absolute $160 tax reduction enjoyed by a household reporting income of $40,000.
I'd take that kind of "hit" any day. Bring it on. C'mon, hurt me.
New York Post headline is confused