Executives at some of Wall Street's biggest firms warned New York lawmakers that raising taxes could cause high-income earners who fled the state during the coronavirus pandemic to leave permanently.
In a Monday letter addressed to Gov. Andrew Cuomo and Democratic leaders of the state legislature, 250 business executives warned that a bevy of tax hikes proposed in mid-March could jeopardize New York's recovery from the economic crisis inflicted by COVID-19. The letter states the increases are unnecessary because the state is poised to receive a financial windfall from President Biden's American Rescue Plan.
"Many members of our workforce have resettled their families in other locations, generally with far lower taxes than New York, and the proposed tax increases will make it harder to get them to return," the executives wrote. "This is not about companies threatening to leave the state; this is simply about our people voting with their feet."
The letter was signed by JPMorgan Chase CEO Jamie Dimon, BlackRock CEO Larry Fink, Citi CEO Jane Fraser, BNY Mellon CEO Thomas Gibbons and Goldman Sachs CEO David Solomon.
Democratic lawmakers in both houses of the state legislature have called for nearly $7 billion in tax hikes on top earners and Wall Street as part of a broader $208.3 billion spending plan. The measure would raise the rate paid by individuals and impose a new levy on capital gains for taxpayers earning more than $1 million.
Democratic New York State Assembly Speaker Carl Heastie said in a statement the budget must "meet the moment" because of the "unprecedented health care crisis."
The proposed increases would:
- Raise the tax rate paid by individuals earning more than $1 million (and couples earning more than $2 million) to 11.85% from the current rate of 8.82%
- Establish a new tax bracket for residents who are earning between $5 million and $25 million (the tax rate would be 10.85%), and a separate one for anyone earning more than $25 million (the tax rate would be 11.85%)
- Make a new capital gains tax worth 1% on individuals earning more than $1 million a year
- Impose a progressive state tax on individuals with a second home in New York City -- commonly referred to as a pied-à-terre tax
- Raise the estate tax from 16% to 20%
- Create an 18% "surcharge" on corporate franchises, utilities and insurance companies
- Reinstate a minimum business tax on corporate capital
Lawmakers proposed the tax hikes even though New York will get about $23.5 billion from the relief bill that Biden signed into law on March 11. The state government is poised to receive about $12.7 billion, while New York City will get an estimated $6.1 billion. The state's counties will get about $3.9 billion, while $825 million will go to small cities, towns and villages in the state.
New York is grappling with a $14.5 billion pandemic-induced budget deficit and has been urged by a group of economists and progressive lawmakers to raise taxes on billionaires to address the looming financial crisis.
The budget plan also includes a 22.6% increase in spending or roughly $16.9 billion compared to the year-ago period.