CWA Local 1180 Budget Fact Sheet
“Shared Sacrifice” Means Millionaires Must Sacrifice, Too: Extend the Income Tax Surcharge on New York’s Wealthiest 3%
Proposed Budget Devastates Vital Services
Education Cuts:
- $1.5 billion in general aid to education and special education
- State’s total share of education spending will decline from a high of 48% in 2001-02 to 40.3% in the upcoming Fiscal Year
- Coupled with the imposition of the Governor’s Proposed Property Tax Cap, these cuts will inevitably lead to teacher layoffs, larger class sizes, increased fees for activities such as sports teams, reduction of art, music, guidance, and other services, etc.
Health Care Cuts:
- $2.85 billion to state aid to Medicaid, which results in a total $5.9 billion cut when federal matching funds are factored in
- $162 million cut to public health and aging programs
- A Medicaid Reform Team (MRT) has been appointed to make recommendations about how to allocate the cuts by March 1st
- Cut funding for Elderly Pharmaceutical Coverage (EPIC) by 20% or $58 million
- Additional cuts to Early Intervention programs for children, support for local public health departments, subsidies for Roswell Park Cancer center.
Higher Ed Cuts:
- Total of $407 million in cuts to SUNY and CUNY, SUNY Hospitals, Long Island Veterans Home and Tuition Assistance Program
Social Services, Mental Health and Transportation Cuts
- $436 million in social services cuts, including $51 million in cuts in programs for the homeless; $34 million in cuts in adoption subsidies; $69 million cut from aid to local school districts to pay room and board costs for children placed in residential schools; $26.7 million in cuts to summer jobs and after school programs.
- $604 million in cuts to mental health programs, including $73 million in reduced reimbursement rates for programs for people with developmental disabilities; $27 million in cuts to alcoholism and substance abuse programs.
- Transfer $200 million in MTA operating revenues to debt service and general fund.
State Workers and Operations
- $450 million in compensation reductions or up to 9,800 layoffs
- $100 million from unspecified closures of prison, youth and mental health facilities
Aid to Local Governments
- $1.8 billion cut from aid to local governments, plus $660 million cut in aid to NYC
Facts about the Personal Income Tax Surcharge
Passed in 2009, applies to individuals with Adjusted Gross Incomes (after all deductions and credits) of $200,000 and families with AGIs over $300,000
- The surcharge raised the top tax rate from 6.85% to 7.85% on incomes between $200g and $300g and from 6.85% to 8.97% on incomes over $500,000
- New York is the most unequal state in the country with the wealthiest 20% earning 8 times as much as the bottom 20%.
- The wealthiest 1% of Americans increased their share of overall national income from 1% in 1973 to 23.5% in 2006. In NY, the top 1% hauled in 35% of total state income.
Who’s Paying and Can They Afford it?
- Those with individual incomes > $200,000 and family incomes > $300,000 comprise the wealthiest 3% of New Yorkers
- This group has an average AGI of over $1 million
- The average income of the richest 1% of New Yorkers is $2.73 million, up from 4,447,000 in 1980
- The median income in New York is $56,000
- The old top rate of 6.85% kicks in on family incomes of $40,000—which means that if the surcharge expires, those earning $56,000, $560,000, $5.6 million, or $5 billion (like hedge fund manager John Paulson)—will all pay the same tax rate!
- The wealthiest NYers just got an average $124,000 annual windfall from the extension of the Bush tax cuts
What’s the Impact on the State Budget?
- The income tax surcharge on the wealthiest produced $4.99 billion in 2010 and is projected to generate $4.94 billion in 2011.
- Allowing the surcharge to sunset on December 31, 2011 will cost New York State $1.5 billion in the fiscal year which runs from April 1, 2011 to March 31, 2012 (the loss of 3 months revenue from the tax); and approximately $5 billion in the next fiscal year (4/1/12 to 3/31/13).
- The lost revenue equals 25% of state funding of Medicaid, 20% of state school aid, 50% of aid to Higher Education including TAP, and 100% of mass transit funding.
- A 1% surcharge on incomes over $1 million (9.97% rate) would yield $1.4 billion
Is this fair?
· While services for the poor and the middle class are slashed, every family in the state with a $1 million dollar income will get a $21,200 income tax CUT!
· In other words, they will effectively see their incomes rise from $18,822 a week to $19,230 per week.
· Every family with a $550,000 income will get a $224 per week tax cut, totaling $11,660 per year.
Lloyd Blankfein, CEO of Goldman Sachs, received total compensation of $13.2 million in 2010. If he pays state taxes on all his income, he will receive a tax cut of about $250,000 per year.