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Taken together, these policies will move our tax system away from the outdated idea that prosperity somehow trickles from the top down.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.