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Taxes Key Component In State Budget

Taxes Key Component In State Budget

Taxes were featured prominently in Governor Cuomo’s proposed $175.2 billion state budget (it is actually $178.3 billion when closing the current $3 billion gap is included.)

  • He proposed keeping higher income-tax rates on millionaires set to expire at year’s end, and extending the 8.82 rate through 2024, noting it provides about $4.4 billion to the state’s coffers.
  • He wants to make the state’s 2% property-tax cap permanent;

  • He would lower the state tax rate from 6.85% to 5.5% for those earning between $40,000 and $150,000, and from 6.85% to 6% for those earning between $150,000 and $300,000.

Reaction to the Governor’s spending plan was mixed. Two prominent “think tanks” ( the Citizens Budget Commission and the Empire Center) criticized keeping and extending the “millionaires” tax. They are concerned the state is heavily dependent on high earners, who “pay almost 40 percent of the income tax”  and that more taxes could cause them to leave the state. There was support for Cuomo’s proposal  to make the state’s property tax cap permanent, and for his holding the line on spending growth (the Governor said he’s keeping the spending growth rate to 2 percent). 

  • In terms of the banking industry , the Governor’s State of the State indicated he plans to introduce legislation to prevent abuse of confession of judgment/stop predatory merchant cash-advance loans.
  • In the proposed state budget , Article VII Regulation of student loan servicers appear to be unchanged from last year’s budget. It would require student loan servicers to be licensed by DFS, and would establish a regulatory framework for the industry in New York. The bill is necessary to implement the Fiscal Year 2020 budget.
  • Financial institutions that are required under Dodd Frank to create subsidiaries received a sales tax exemption for transfer of properties and services to such subsidiaries. The exemption is extended from June 30, 2019 to June 30 2021. 
  • The carried interest “loophole” would also be eliminated under the Governor’s proposal.

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