Millionaire’s Tax

The Truth According To Denny Farrell

ICYMI: Assembly Ways and Means Chairman Denny Farrell took a break from debating budget bills with GOP lawmakers yesterday to sit down with me in his Capitol office to provide a behind-the-scenes view of how this deal got done.

Farrell, who was elected in 1974, was unusually candid (although he’s making that something of a habit these days), revealing, for example, that he believes Gov. Andrew Cuomo knew all along he would eventually give in on the so-called millionaire’s tax – despite his repeated claims to the contrary.

Farrell, who has longstanding ties to the Cuomo family forged during Mario Cuomo’s first run for governor, recalled when Andrew Cuomo floated the idea last November of a complete tax code overhaul during a closed-door meeting of the black and Latino legislative caucus.

“The governor said…’there should be a progressive system. Look at the people at the bottom that are not getting a break.’ He talked about it. When I heard that I knew right away that he was thinking on it.”

“So, he knew all along where it was. If he ‘d have said anything like that in his first year, everybody would have said: ‘He’s just another taxing Democrat.'”

Farrell also challenged Cuomo’s desire to kill member items for good, noting the governor has plenty of economic development cash to dole out on his own – or, as the assemblyman put it: “The governor has people who walk around with money in their pockets.”

“And their job is to go place to place to do what they can to bring jobs in,” Farrell continued. “And they want to have the money right away, so we give them that loose money so they can help people do certain things.”

“That’s what member items is also…I don’t get very many federal things, state things in my district…there are programs within my district that would like to get some help from the state, and this is the way we can do it.”

Assembly Speaker Sheldon Silver, a close Farrell ally, tried and failed to get member items back into this year’s budget. Farrell suggested that despite the governor’s tough talk, this issue might not yet be dead.

He floated the idea of going back to line-item grants in the budget that are directed by individual legislators, rather than a lump sum of cash allocated to the rank-and-file by the legislative leaders.

Skelos: Cuomo And I Have ‘A Commitment’

Senate Majority Leader Dean Skelos continued his ongoing effort to remain thisclose to Gov. Andrew Cuomo during a a radio interview this morning, informing WOR’s John Gambling that he and the state’s top Democrat have made a mutual “commitment” to continue treading the path of fiscal conservatism and keep Albany from getting mired in gridlock.

“Now working with the governor, and I think one of the important things to note, John, is you don’t see the dysfunction in Albany that we’re seeing in Washington right now because the governor and I have committed to each other that we’re not going to allow that to happen,” Skelos told the radio host.

“And we’ve discussed issues on how to bring spending down, how to bring taxes down. You know, last year we cut a $10 billion dollar defecit without raising any taxes at all. And I think that’s significant. So we’re moving in the right direction in New York State. Is everything the way I would want it, 100 percent? The answer’s ‘no.’ That’s not life.”

Gambling grilled Skelos on the tax code reform deal passed during last week’s extraordinary session, repeatedly asking how it’s possible that lawmakers’ claims of an across-the-board tax cut while generating $1.9 billion in additional revenue could be true.

Skelos conceded that high-income earners – couples who make $2 million a year and individuals who make $1 million – will see less of a tax reduction under this new structure than they would have had the so-called millioniare’s tax been allowed to sunset at the end of the month as scheduled. But he also insisted that “every single person’s tax rate will be lower on January 1 then it is right now.”

The deal did not generate sufficient revenue to wipe out the entire $3.5 billion defecit projected for next year. Skelos acknowledged lawmakers are going to have to cut significantly – although, since it’s an election year, perhaps not quite as much as in 2011 – when they return to Albany and formally start budget talks.

“Forty-three percent of the people in New York State pay no income tax at all, and it actually may be a little higher than that,” Skelos told an outraged Gambling. “New York State spends $1 billion a year to individuals that pay no taxes…so this is what we have to look at now, is to continue to bring our house in order.”

Tax Code Implications For 2012

Here’s a sentence you don’t read everyday: Democrats today are gleeful over a New York Post editorial.

No, really. The Post’s conservative editorial board blasted the Senate GOP for what it saw as caving on Gov. Andrew Cuomo’s tax overhaul measure, writing that the complicit Republicans essentially “lied” about their stance on taxes.

And today Democrats are sending out a fundraising letter penned by Senate Democratic Campaign Committee Chairman Mike Gianaris comparing the Senate GOP to Mitt Romney, the presidential candidate who they just endorsed.

Writes Gianaris:

This makes sense since they clearly embrace his flip-flopping technique. Truth is: you just can’t trust that what Senate Republicans promise in order to get elected is what they’ll actually do when governing, and New Yorkers know when we’re being hoodwinked. So let’s keep the pressure on and see if we can’t get the Senate Republicans to flip-flop on a few more key issues that New Yorkers overwhelmingly support.

The flip-flopping critique a is a potent one in politics. Senate Democrats ought to be careful to not apply that critique too broadly, given that Cuomo, their party’s leader, had to shift his position on taxes as well.

So was Senate Majority Leader Dean Skelos rolled on this? Hardly.

Getting an overhaul of the tax code — which Republicans can spin as a tax cut thanks to an end-of-the-year expiring surcharge — was perhaps the best deal the 32-member majority could have gotten considering the circumstances.

Consider this:
-Two of the most important issues for liberal voters in a Democratic state, same-sex marriage and the so-called “millionaires tax,” are resolved heading into an election year.
-A major issue for suburban swing voters, the controversial MTA payroll tax, was partially repealed for businesses and schools and the GOP was able to make those cuts permanent.
-Republicans can point to a $300 to $400 a year tax cut for most New York families.

Some Democratic lawmakers have indicated they want more revenue-raisers next year in order to fill the remaining budget gap, which now stands at around $2 billion. And Republicans still face an uphill battle when it comes to redistricting. Even if lawmakers redraw their own boundaries (which, given voter enrollment, will have to look pretty crazy in order to stack the deck for Republican senators), a presidential election year will makes their majority tenuous.

Look to Republicans next year making their adjusted three-pronged argument. First, they’ll tout their bipartisanship. Secondly, they’ll cheer the tax cut (or millionaires tax adjustment). And lastly, they’ll remind everyone as much as possible the chaos that reined during the Democrats’ single two-year term in the majority.

The last point may not be as potent, given that Cuomo has become, for now, a stabilizing force in New York government.

FPI Has A Tax Proposal Of Its Own

As details of Gov. Andrew Cuomo’s potential tax proposal gets leaked out this morning, the union-backed Fiscal Policy Institute has released a plan of its own.

The institute proposes a sharp increase in the rates for the super wealthy, proposing a rate as high as 9.99 percent for those making $100 million and more. Single filers earning $200,000 and less would see a tax cut of about 1 percent.

The FPI’s Frank Mauro and James Parrot say the plan would result in stablizing the state’s fiscal woes and help close a $3.5 billion deficit for the coming 2012-13 fiscal year.

From the report:

“If New York were to establish a one percent increase from 6.85 to 7.85 percent beginning at $665,000, the Division of the Budget’s estimate of the current one percent threshold, with another one percent at $1 million, and additional one half of one percent increments at $5 million and $10 million, the state could generate between $4.4 billion and $5.1 billion per year.”

Meanwhile, Fred Dicker and Erik Kriss write in The New York Post today that Cuomo is seeking rates higher than 6.85 percent that increase at $500,000 increments from $1 million to $2.5 million in earnings.

Sources tell the WSJ that Cuomo is seeking higher rates for those making above $2 million and decreased rates for those making $300,000 and below.

FPI_ReformingTheNewYorkTaxCode_20111205

On Taxes, Ball Seems Likes A No (Sort Of)

Raising taxes in order to address the coming 2012-13 fiscal year deficit would earn a “no” vote from Sen. Greg Ball.

The Putnam County Republican hedged a little in a phone interview this morning on a possible tax code change, saying he would want to see plan that addresses long-term economic woes and joblessnes.

“I think beyond the politics that we hold the line and not increase taxes,” Ball said. “We have no future as a state being number one in all the wrong ways including taxation.”

Senate Republicans are due back in Albany on Wednesday to conference, but no special session of both chambers of the Legislature has been called by Gov. Andrew Cuomo.

Ball, who issued a statement last month calling for fairness in the state’s tax structure, which came out before the Wall Street Journal’s Jacob Gershman broke the story about the Cuomo administration pursuing changes to the tax code.

But today Ball left some wiggle room for voting yes, saying that he would only want to see a plan that is for the long haul and cuts middle class and business taxes.

“I think we’ve worked very well with this governor but I don’t feel we should be enabling tax increases of any kind in the current environment especially short of a complete overhaul of the tax code,” he said. “It should be seen as a long term plan to create jobs.”

Ball said he was yet to see a plan.

“That’s why conference on Wednesday is going to be so important,” he said.

Assembly Told To Prepare For Three-Day Session

Members of the Assembly are being given a heads up this morning that a tentative three-day special session in Albany next week is possible, a highly placed Democratic source said.

The potential session would be held Tuesday, Wednesday and Thursday of next week.

It remains unclear what will be voted on since a plan to reshape the state’s tax code remains very much up in the air, but specific numbers are on the negotiating table right now.

The source described the tentative plan being discussed as an “Obama-esque” tax cut for the middle class and possibly small businesses, while upwardly adjusting the tax rate for high-income earners.

In order to make the plan amenable for Senate Republicans, it is likely the tax cut would be a large one, making a rate change on the rich significant.

Support appears to be building for some sort of change to the tax structure, which Gov. Andrew Cuomo said this week he is considering.

Any plan would have to gain approval from multiple Senate Republicans and several have said they would conditionally support certain tax plans.

Cuomo has said he would not want to call lawmakers back to Albany for a special session without a firm plan in place for the Legislature to vote on.

Other potential items to vote on would be flood relief for parts of upstate, as well as changes to the livery cab medallion bill. An initially livery cab bill was approved by lawmakers but has subsequently lost support because of a lack of provisions for the disabled.

The state faces a $350 million deficit in the current 2011-12 fiscal year and a gap as high as $3.5 billion in the coming 2012-13 fiscal year, which begins April 1.

Senate GOP Divided On Tax Code?

Democrats are cheerfully blasting out a quote smartly recorded by The Times’ Thomas Kaplan in this morning’s story on Gov. Andrew Cuomo’s consideration of revamping the state’s tax code. It comes, naturally, from Republican Sen. Greg Ball.

“If the governor forced the discussion about actually aggressively going back and redoing the tax code with a complete overhaul, that’d be extremely helpful, especially in creating a more hospitable environment for working families and the real job creators,” the senator, Gregory R. Ball of Putnam County, said.

Ball released a statement earlier this week expressing some sort of support for a new look at taxes, though the offiical Senate Republican line is no new taxes, ever.

Recall that Sen. John Bonacic, a Republican from Orange County, briefly introduced his own version of the millionaires tax this year before it was quickly bottled up. He expressed regret in March that it wasn’t included in the final budget.

Pro-millionaires tax Democrats point to the lack of actual rich people in Republican-heavy upstate, while the concentration of millionaires is in New York City, predominantly represented by Democrats. The GOP holds a two seat majority.

Also, Ball hasn’t ruled out launching a primary against Rep. Nan Hayworth, who represents what has become a swing district in the last several years.

Keep in mind a few things: as noted earlier, Ball has tendency to publicly consider backing liberal causes (ie gay marriage) before backing off. It remains to be seen if he’ll call for religious protections in the tax code bill.

And, at the same time, Ball’s statement to Kaplan carefully skirts around phrases like “tax increase” and “millionaires tax.” Still, it only serves to remind just why Republicans backed Mary Beth Murphy last year in the Senate primary.

Revamping The Tax Code Started Before Somos

Talk at the Capitol buzzed about a possible revamping of the tax code that could be proposed by Gov. Andrew Cuomo, thanks to a Wall Street Journal piece today. Cuomo did little to deny that he was looknig at the tax code changes, which could mean an increase on the wealthy (the governor did say the piece was “breathless” in its reporting).

Cuomo raised the idea at a retreat for black and Hispanic lawmakers in Puerto Rico, Somos el Futuro. But back on Nov. 4, Liz sat down with Assemblyman Karim Camara, the chairman of the Black, Puerto Rican Hispanic and Asian Legislative Caucus, who said the idea was broached pre-Somos at a meeting in October.

Camara told her this:

“In terms of his position on restructuring tax code, I can’t say at this point. That came up,” Camara said.

“But I don’t know his official position on that. But I will say that’s something we have to consider, the restructuring of the tax code, so sagin, we’ll have a more progressive system of taxation, and we won’t have to worry about the continued deficit, sunsetting the millionaire’s tax, etc. Let’s have a progressive system…It’s not about just tax warfare, let’s tax the rich.”

Sen. Liz Krueger, D-Manhattan, too, said back on Nov. 2 there’s room to work on revamping the tax code.

Cuomo has in the past weeks talked about the tax code and the issue “fairness.” The governor left it vague today (and has apparently danced around the edges with lawmakers as well), but has framed the effort as a way to boost job growth.

Progressives Canvass For Millionaires Tax

A coalition of liberal groups and organizations is forming a new campaign to push for a “true” millionaires tax, the same day Wall Street Journal’s report that Gov. Andrew Cuomo is considering a reshuffling of the state’s tax code in order to achieve a more progressive system,

Adopting the language of the Occupy movement, the campaign known as “Knock For The 99%” will canvas communities across the state on Saturday to push for the tax. The coalition takes exception to the expiration of a surcharge on those who make $200,000 or more to expire at the end of the year, a move the governor supports.

Canvassers plan to speak to New Yorkers in targeted state Senate and Assembly districts in Saratoga, Troy, Syracuse, Buffalo, Niagara Falls, Yonkers, Poughkeepsie, Newburgh, New York City and Long Island (several of those areas — especially western New York and Dutchess County — are considered by Democrats as ripe for picking up at least one or two seats next year).

There are renewed calls from activists for keeping that tax on those who make $1 million and higher.

From the Knock For The 99 Percent’s website:

The people of New York – our families, friends, and neighbors – have struggled to build a foundation of success for generations to come. But right now, New York is only working for the top 1%. They’re getting richer while the rest of us – New York’s 99% – are getting crushed. Governor Cuomo and the New York State Legislature are planning a $4.6 billion tax cut for the top 1%.

Cuomo will be making a round of radio interview this morning: Fred Dicker’s Talk-1300 show at 10:07 and then a hour later on Susan Arbetter’s The Capitol Pressroom.

Report: Cuomo Considering Tax Rate Overhaul

The Wall Street Journal tonight is reporting a potential budgetary game-changer that is being considered by Gov. Andrew Cuomo: adjusting the state’s tax rates so that the rich pay more, while making the poor pay less.

Making the tax rate in New York more progressive would be part of an overhaul economic rejiggering that could be in store for the proposed 2012-13 budget, the paper reported.

Writes Jacob Gershman:

Wealthier New Yorkers would pay a higher rate than they did three years ago before the temporary tax hike, which expires this year. But they’d pay less than they did this year when the higher rates were still in effect.

The higher rates would be packaged with tax breaks, possibly targeted at the middle class. One way of giving a tax break would be to broaden the brackets so that fewer filers are paying the top rate.

The administration denied there was a proposal that was being privately discussed.

Cuomo has said publicly in recent weeks that was eyeing potential changes to the tax code and has spoken about “fairness,” but has not elaborated on what that might mean. He has also spoken in the last month with a renewed sense of urgency over the state’s precarious finances.

The approved 2011-12 fiscal year budget closed a $10 billion gap without major tax increases. But the state faces a deficit for the coming fiscal year that is as high as $3.5 billion and a current-year gap of $350 million.

The governor supports letting a surcharge on those making $200,000 or more to expire at the end of the calendar year and has said he opposes other tax increases on the wealthy.

The no-new-taxes pledge has made him a firm ally of the Senate Republican conference on fiscal measures, but has cost him some support among members of the Democratic Party’s progressive base. A resolution supporting a “true” millionaires tax proposed by some Democrats at the party’s fall meeting earlier this month was swiftly shot down.

The story was quickly emailed out Tuesday evening by Democrats and activists within the progressive movement who have been eager to see some movement on the issue.