Dutchess County Executive Marcus Molinaro last week launched his uphill campaign for governor with a pledge to “roll out a bold property-tax cut that defenders of the status quo will despise.”
The newly minted GOP nominee said he’d “fundamentally alter the tax system” — and “do it out of compassion.” He also promised to take over the local share of Medicaid costs, saving at least $3 billion
Molinaro’s rhetoric made it all sound obvious — and easy. In fact, New York faces real financial constraints that’ll limit options for whoever occupies the governor’s office starting next January.
Start with the biggest single variable in Albany’s financial plan: the temporary added income tax on high-income households, due to expire at the end of calendar year 2019, which now generates $4.5 billion in annual revenue.
Initiated in 2009 under former Gov. David Paterson and repeatedly extended by Gov. Andrew Cuomo, the so-called millionaires tax boosts the top statewide rate from 6.85 percent to 8.82 percent for taxpayers with incomes starting at $1 million for singles, $2 million for couples.
Top-bracket residents of New York City already pay the second highest state and local rate in the country, trailing only California’s. Now that the new federal law curtails state and local tax deductions, New York’s effective tax burden has risen to an all-time high.
The SALT cap compounds the risks associated with the state’s heavy dependence on taxes from the volatile incomes of its highest-earning 1 percent, who generate more than 40 percent of the income tax.