New York lawmakers approach budget to boost corporate revenue and taxes by $ 4.3 billion

Lawmakers were informed of a plan under which income tax rates would increase from 8.82% to 9.65% for single registrars reporting more than $ 1 million in revenue and joint registrars reporting more than $ 2 million , people said.

The plan would also add two new tax ranges. Income above $ 5 million would be taxed at 10.3% and income above $ 25 million would be taxed at 10.9%, people said about the plan, and the new rates would expire in 2027.

New York City’s highest income tax is 3.88%, meaning that city millionaires would face a combined state and city income tax between 13.5% and 14.8% under the new plan. California currently has the highest income tax rate, 13.3% on revenue above $ 1 million.

The budget would also increase New York’s corporate franchise tax to 7.25%, from 6.5% by 2023, people said. Previous legislative proposals to raise the property tax and impose a 1% surcharge on capital gains are not part of the emerging budget deal, people said.

Final versions of the bills are due to be completed and voted on earlier this week, officials said. The state’s fiscal year began on April 1. Controller Tom DiNapoli, a Democrat, said last week that if a state budget is not approved on Monday, some 39,000 state workers could be delayed in receiving their salaries due this week.

Senate majority spokesmen Andrea Stewart-Cousins, a Yonkers Democrat, and Assembly spokesman Carl Heastie, a Democrat from the Bronx, did not return emails requesting comments on Sunday. A spokesman for Robert Mujica, Cuomo’s budget director, declined to comment.

A legislative official said lawmakers are also close to an agreement on the legalization of mobile sports betting in New York, which Cuomo’s advisers estimate can raise up to $ 500 million a year. This change, like other programs, would bring the total amount of new revenue in the budget to around $ 5 billion, the official said.

The deal would mark the first time that income taxes increased during the tenure of Mr. Cuomo, a Democrat who took office in 2011. He had boasted that he had lowered income tax and real estate taxes and restructured corporate taxes into previous budgets. Negotiations over this year’s budget have unfolded while Cuomo faces pressure on accusations that he has acted improperly in the workplace and investigations into how his government handled Covid-19 in nursing homes.

Mr. Cuomo denied having touched anyone inappropriately and apologized if his behavior in the workplace bothered anyone. He said the state is cooperating with an investigation by federal prosecutors about nursing home policies, as well as with an impeachment investigation by the state assembly that examines both issues.

Company executives warned lawmakers that if excessive tax increases were adopted, residents who work remotely in other states would be reluctant to return to New York. The most profitable 5% of taxpayers account for 60% of what the state collects with income tax.

Proponents of tax increases said higher rates will not stimulate migration. The number of millionaires in New York increased after state lawmakers raised income taxes in 2009, they said.

Republicans said last week that there was no need to raise taxes due to the influx of federal aid. The federal government also passed a Covid-19 relief bill in March, which earmarked $ 12.6 billion in unrestricted aid to New York State, as well as billions more for education and health programs.

In January, Mr. Cuomo proposed a $ 1.5 billion income tax increase as part of a plan to cover a $ 15 billion deficit in the current and previous fiscal year. The state budget framework has improved since then, with tax collection above estimates.

Cuomo’s initial proposal assumed that the state would receive $ 6 billion spread over two fiscal years, and the governor said additional funds would avoid the need for tax increases.

But the Democrats who control the Assembly and the Senate have pushed for additional tax increases to generate recurring revenue that they said would be needed for essential social service programs. Its position is supported by unions and progressive organizing groups. Party members now have a two-thirds majority in each chamber, which is enough to overturn Cuomo’s veto.

State Sen. Jabari Brisport, a Democrat from Brooklyn, was one of several lawmakers who slept outside the Cuomo Capitol office as part of a protest last week. Brisport said he believed Cuomo was an obstacle to raising taxes on the wealthy.

“We have to take this physically to the governor, because he is totally out of touch,” said Brisport on Friday.

Rich Azzopardi, a senior adviser to Cuomo, said that “many people sleep in this building at this time of year” while making the budget.

Write to Jimmy Vielkind at [email protected]