What New Yorkers won’t tolerate is an unfair tax system. Unfortunately, that is exactly what we have today.
In New York City, a couple that earns $50,000 pays an effective local income tax of 3.3 percent, while the couple that earns $1 million pays 3.7 percent.
Why should a police officer, a teacher, or a firefighter have to pay nearly the same income tax rate as a billionaire like Mayor Michael Bloomberg? A tax that is basically flat makes no sense.
New York City needs a progressive local income tax that restores fairness and puts money in the pockets of low- and middle-income families. That’s why my office has created a New York City Tax Relief Proposal. This plan would reduce taxes for 99 percent of New York City tax filers.
The family that makes $50,000 would get a tax break of about 29 percent. The family that makes $1 million would pay about 15 percent more than they do now—not a big burden at that income level.
Some critics will say that this proposal will chase the wealthy out of New York City. Tax competition among jurisdictions is something we do have to consider when setting tax policies. But do we really believe that high-income earners care so little about New York City that an effective tax increase of less than 1 percent will make them leave?
Most high-earning residents love the city and would not abandon it just because our tax system is re-tuned to be more equitable. Moreover, the wealthy want safe streets, clean parks, and good schools just as much as the rest of us do.
Another benefit of our Tax Relief Proposal is that even as it gives 99 percent of New Yorkers a tax cut, it raises overall income tax revenue for the city budget by asking those in the top tiers to pay their fair share.
New York City faces multi-billion budget deficits into the foreseeable future and the added money from our Tax Relief Proposal — about $450 million per year on average — would be a significant step toward balancing our budget and protecting the vital services we depend on.
By providing Tax Relief to middle- and low-income families we can strengthen the city’s economy, build up our middle class, and narrow the divide between rich and poor.
My office recently issued a report on increasing income inequality which found that the income gap in our city far outpaces the national divide. The causes for this may be open to question, but there is no denying the trend has been toward a greater concentration of income at the very top.
For example, during the last economic boom, from 2002-2007, the top 1 percent of New York City tax filers captured two-thirds of the entire income gains in the City.
The NYC Tax Relief Proposal is intended to promote “shared prosperity” so that the benefits of the current recovery are spread to the 99 percent more evenly than they were the last time around.
John C. Liu is the Comptroller of the City of New York.