Most New Yorkers will get tax cuts under the sweeping tax overhaul passed by Congress on Wednesday, but high-income wage earners will face a significantly greater federal tax burden, according to an analysis by a business group.
Continue Reading Below
The Partnership for New York City said that on balance the tax legislation, which sharply lowers corporate tax rates as well as taxes on other businesses, would "benefit the overall economy and the city's competitive position as a global business capital."
But its analysis also showed a negative impact on high-income earners in New York City and across the state, who will be far worse off than high earners in some other states.
The Partnership works with government, labor and the civic sector to promote New York City.
Mayor Bill de Blasio, a Democrat, and other local officials have blasted the legislation, saying it would raise taxes on the middle class. The study, however, found that typical New York City households earning $200,000 or less, and even married couples with children earning as much as $500,000 a year, will see their taxes fall next year.
But taxes on higher earners are expected to rise. Single earners with incomes of $5 million in New York City, for example, would see their federal tax bills rise by nearly $140,000, while married couples would see taxes rise by about $115,000, the analysis found.
Continue Reading Below
In contrast, the study found that similar taxpayers in Florida would see taxes fall by more than $102,000 for single filers and more than $118,000 for couples.
In the rest of New York state, taxes also would rise for single filers with incomes beginning at $500,000 but fall for couples filing jointly with incomes up to $1 million.
The difference between New York and Florida comes from a provision of the federal tax bill that limits deductions now available for state and local taxes to $10,000 a year, hurting affluent taxpayers in states with high state and local taxes. Florida has no income tax, while New York City residents pay both a state and city income tax.
"There is a huge gap," said Kathryn Wylde, chief executive officer of the Partnership. "The point is, New York's economy is dependent on top earners. They pay half the income taxes in New York City. They are people who are going to get killed."
She said the study raised questions about recent calls for a further increase in city income taxes for the highest earners to pay for the subway or other services.
Many experts are predicting the higher tax rates won't produce a large exodus of high-income earners in New York. But Ms. Wylde said they might deter entrepreneurs from moving their businesses to the city.
"People should understand what the implications are of the bill that passed," she said. "Employers will have to figure out what it is going to cost them to compete for top people who will be paying these taxes -- scientists, entertainers, financial and investment professionals and top executives."
(END) Dow Jones Newswires
December 20, 2017 21:00 ET (02:00 GMT)