Progressive versus regressive and tax exempts; New York State tax policy discussed
December 14, 2011 —
Anyone looking for detailed information about Governor Andrew Cuomo’s new tax plan could have learned a lot from the lengthy and complex presentation given by Frank Mauro, the executive director of the Fiscal Policy Institute. Mauro spoke at a meeting called Forum on Tax Relief and Reform at the Hurleyville Firehouse on December 12.
Mauro explained there are some taxes that are regressive and some that are progressive. A tax, such as the state sales tax, is regressive because, while paying taxes on necessities such as fuel and clothing, “lower and middle income earners have to pay a larger percentage of their incomes to live than higher income people.”
A progressive tax, on the other hand, such as the income tax, “is like an income tax with graduated rates, where the share of your income going to the tax goes up as your income goes up.”
In Mauro’s view, the goal for the state should be a tax system with more progressive elements that cancel out the negative impacts of the regressive elements on low and middle income earners. He said that even with Cuomo’s new tax, state taxes overall are not progressive enough.
As an example, he provided a chart that showed that in 2009, the top 1% of earners in the state, earning more than $633,000, paid 8.4% in income taxes, while those earning between $33,000 and $56,000 paid 11.6%. The changes to the income tax, adopted by Cuomo and the state legislature on December 8, to some degree corrected the imbalance that would have existed had the so-called millionaire’s tax been allowed to expire without legislative action, but the imbalance between the top earners and everyone else is still pronounced.
The income tax structure was just one topic covered at the two-hour meeting, which was hosted by the Sullivan County Senior Legislative Action Committee.
County treasurer Ira Cohen touched on several topics. Among them was the high number of tax-exempt properties in Sullivan County. Cohen said, because the state’s constitution protects the rights of tax-exempt organizations and because over the decades state courts have expanded those rights, the way to deal with changing the status of tax exempts would be to convene a constitutional convention to make changes to the constitution.
Mauro said he did not agree with the notion of convening a constitutional convention, and that the matter might be addressed through constitutional amendments. Historically, however, lawmakers in Albany have been reluctant to make any changes that would restrict the rights or privileges of tax-exempt organizations in New York State.