Eliminate NYC Income Taxes for Struggling Households

There's something small New York City can do for its struggling residents that will yield big results -- eliminate personal income taxes for households that already pay no State or Federal income taxes. This minor reform -- a policy proposal we recently developed with the nonpartisan, nonprofit Drum Major Institute for Public Policy -- would put more money into the pockets of hundreds of thousands of New Yorkers at a time when many have already reached a point where every dollar has been stretched to the limit.

Of the nearly 250,000 households in New York City earning under $45,000 who are not required to pay either State or Federal income taxes, roughly 97% have children. Many of them are scraping by on a single income. All told, we're talking about over 700,000 people in our city -- most of the children -- that stand to benefit if we eliminate this unfair burden.

Doing so would put more than $500 into their pockets -- that's money for food, clothes and doctor appointments. That's money that will go directly to local businesses at a time when this ever-worsening recession is hitting everyone hard.

In 2008, New York City raised an estimated $71.9 million by taxing these households -- that's less than two-tenths of one percent of total city revenue for the entire year.

Like many of these struggling families, our City's financial situation is forcing us to make some tough choices too. We cannot afford tax cuts that would jeopardize our ability to keep cops on the street and teachers in our classrooms.

To compensate for the loss in revenue, we're going to ask those who are doing better financially to shoulder more of the burden.

It's a simple idea -- those hit hardest by the economic crunch deserve some assistance. And those of us doing better should be doing more to help.

Right now, New York City taxes everyone making above $90,000 the same. We're not looking to tax the middle class a penny more, but we will ask the City's top 4% to kick in a little extra. We'll stagger the increases, so the lucky few with incomes over a million dollars will pay the most. 96% of city taxpayers won't see any increase at all.

Taken together, these policies will move our tax system away from the outdated idea that prosperity somehow trickles from the top down. Too often tax cuts are designed to benefit those at the top of the income scale, when instead we should be directing tax relief to the families that need it most. This is not only fair, but smart economic policy.

This targeted relief will most help the City's economy and put us back on the road to long term prosperity. By removing the barriers that many struggling families on the lower end of the economy face, we can help them climb up the economic ladder.

As we work to reform our tax code, we'll need to partner with Albany on a coordinated approach. But make no mistake -- these changes are long overdue.

Comments

[ReasonIsMyReligion]

Typo?

-- most of the (sic) children -- ?

-- most of THEM children --

[ReasonIsMyReligion]

Huzzah.

-- New Yahker

[Dazed By It All]

I'm sure you mean well, but I have one question. If you increase taxes on those 40,000 people who are generating more than 50% of the tax revenue, how many of those do you think might decide that they've had enough of all the taxes and move somewhere else? That's really going to help the tax base. To make up for this I'm sure Bloomberg will find something new to tax, eh?

[SoozeNYC]

I'm terrible at math: what's the precentage of 40,000 out of eight million?

The thing is, those 40,000 people have really, really serious money, and a large portion of it isn't even taxable income because it comes from dividends; they don't choose to live in NYC because of tax advantages, one way or another. They live in NYC because it's totally unique, it's the center of the various worlds they revolve in, that will probably not ever be duplicated again, much less in the near future. For the hardcore, the options are largely European, and that's not any cheaper.

[ReasonIsMyReligion]

Anyone THAT senstive to taxes has either already left for a city with NO city income tax, OR they should recognize that the city tax is NOT currently "progressive."

[sc300nc]

They will be getting an extra $12 a week with the stimulus package...and they want more?

[Pleneras]

Today's version of the income tax came into being during the 1939's internal revenue code and it led to less spending. With the fair tax act the government will receive those tax dollars via spending. Reason why this has not been done is because they rather take your money away before you buy something with it. This thinking reflexs nothing but selfishness and the disdain for working people. As for the previous poster. Patriotic is serving your country or doing something great on behalf of your country > not believing every silly phrase some group or individual tells you. But not serving your country does not mean that you are not.

FAIR TAX!

[SoozeNYC]

My salary is well above 45K and well below 90K, like Osmona (apparently), and I would suggest Omona re-read the article: I don't se anything in it that suggests that people in our bracket are going to see the tax hit or get the short end of the stick.

As to EyeDocoo7's comment:: Okay, then I guess you feel that all the tax benefits given to the wealthy and the corporate over the last eight years should be rescinded immediately? Actually, tax cuts at the lowest end of the income spectrum do stimulate local economies, because it gives people more money to buy necessities that they were triaging previously (Rent or food? Food or medication? Medication or gas? Gas or heating oil?) Any time you put money in the pockets of people who can't cover basic survival costs, it's guaranteed to go right back into the economy. Putting it in the pockets of already-rich people guarantees... Campaign contributions down the line??

[BobLablah]

I thought paying taxes was patriotic. Now it seems like you're saying cutting taxes is good for the economy. Which is it?

[jbusch8]

umm, did you make it to the end of the article? the part where she said she would RAISE taxes on the top 4%??

and, yes, paying taxes IS patriotic. taxes pay for things like, oh you know, the military (on the fed level) and police/fire protection (state level). Isn't supporting the military the most patriotic thing a person can do (shy of actually signing up)? well, seems to me that paying taxes to support our troops and keep our citizens safe is pretty darn patriotic.

[BobLablah]

So it's only patriotic for rich people to pay taxes? I'm not sure I understand that logic.

[ReasonIsMyReligion]

Take it up with the shmoes on the UBS list.

[doyle005]

Their math does not add up. Here is a link to the Personal Income Rates for NYC:

http://www.nyc.gov/html/dof/html/pdf/05pdf/pit_rates.pdf

Here are the rates based on $45,000 a year:

Married Tax Rate $1454.96 year or $27.98 a week
Head of Household: $1508.65 a year or $29.01 a week
Unmarried: $1526.02 a year or $29.35 a week

While the yearly number is well over $500, the weekly number is well below and I'm not sure if the difference weekly will make much of an impact in peoples lives as a cab ride in Manhattan costs more than the weekly personal income tax. Also, keep in mind this is without any state and federal tax credits allowed under the NYC tax code.

[-0013]

Please get rid of the NYC income tax. The city hit me up for $1000 last year from income in the stock market and I make under 45K a year.

[SoozeNYC]

If you're using the cost of a cab ride as a standard in this discussion, you must 1) not live in NYC; 2) make a lot of money; 3) have no idea how people cope when they don't make a lot of money (like, uhh, giving up cabs, if you ever used them in the first place?)

When you're struggling and/or broke, $28 is a fortune...

[AnnfromCA]

Hmmmmm*

Bloomberg just talked yesterday and pointed out that a mere 40,000 NYC residents pay more than 50% of the current taxes.

Good luck.

[ReasonIsMyReligion]

Now you got me curious how much of that 50% was Bloomberg personally.

Assume your statement is true. The whole point is those 40,000 can still afford to help those 700,000 with what a commenter above suggests is a pittance.

[InDaZone]

NYC should become their own state or district!! - Buffalo Resident

[SoozeNYC]

I agree. Albany sucks more money out of us than we ever get back, let's see how New York State fares without all the revenues generated from NYC.

[CaptainObvious]

I'm a fellow Buffalonian and I'm with you on this. NYC is bleeding the state dry - in my opinion, NYC residents deserve higher taxes. They could start by taxing the Wall St guys a bit more - they should be able to afford it considering the $700 billion welfare check we just sent them.

[ReasonIsMyReligion]

I hear ya on begrudging the banker bailout, but...

NYC is the biggest net tax exporter to NYS of any city in the state, and NYS is the biggest net tax exporter to the federal treasury.

I'd be happy if it was the STATE of New York City.

[Osmona]

Yeah and what about those of us who make over $45,000 but enormosly less than $90,000? We always fall through the cracks or get the short end of the stick.

[EyeDoc007]

Don't you know that tax cuts do nothing to stimulate the economy?

[-0013]

Yeah giving people more disposable income does nothing for the economy.

That's just crazy talk.

[Pquilson]

it is so simple as to defy the liberal logic.

[jbusch8]

READ THE WHOLE ARTICLE

yes, its a tax cut, but guess what?? TAXES WOULD GO UP UP UP FOR THE TOP 4%

THATS A TAX HIKE

get over your ideology for one friggin' second, please!

[Pquilson]

When the income tax was devised, the public was told that the tax would apply only to the very top earners. At that time, it was to be only 2000 people, or so. We see now what has happened. My largest expenditure, on an annualized basis, is income tax and self employment tax. I am not wealthy, nor even in the top 10%. I would love to see a flat tax, so that everyone pays their fair share.
Politicians can not tell the truth, for the truth would hurt their chances of doing what they intend.

[Pleneras]

Looks like it's you who does not know. More money in your pocket, more money to spend.

[EyeDoc007]

So why was everybody here against the tax cuts in the stimulus bill?

[ReasonIsMyReligion]

The intent of the proposal is NOT to stimulate the economy -- it's to help people who need the help; people who both the State and the IRS have deemed worthy of not paying income tax. It's NYC that's out of step.

[jhNY]

Here's another great idea for NYC citizens-- food stamps for longer than 3 months, which single folks can't now get without finding work or at least doing make-work for the city at a time when the city should be paying wages to everybody who works, if for no better reason than to put more cash into the local economy. While work requirements may make sense to those tough-love social engineers who seem to dominate our government in good times, now that bad times are upon us, it's just cruelty to the poor to insist on the provision now. After all, where are the jobs here that they should be filling?

The stimulus package allows municipalities to rescind this requirement specifically, but so far, the Bloomberg administration has refused. If their objections have anything to do with budget restraints, I'd almost understand, but elsewhere in the news, Billionaire Bloomberg, because he can feel their pain if nobody else's, is setting aside tens of millions of dollars to retrain Wall Street brokers and clerks laid off in the debacle their bosses have made of their business. This is a crazy misdirection of resources so long as the same government is withholding food from the poor. Perhaps these Wall Street worthies should set aside a portion of their bonuses to retrain themselves, but I'd bet they know a bad investment when they see one requiring their own capital. After all, where are the jobs here they should be filling?

[Pquilson]

Why is it cruel to require that people who receive benefits to work for them?