Lawmakers in 9 states are proposing larger taxes on the rich to assist fill rising funds holes from the coronavirus pandemic, and the checklist is more likely to develop, in keeping with a legislative group.
After New Jersey handed its “millionaire’s tax” — elevating the revenue tax price for these making $1 million or extra — legislators in New York, California, Massachusetts, Maryland and different states renewed their efforts to hike taxes on excessive earners.
Whereas a number of the efforts could fail, states with multibillion-dollar income shortfalls are more and more trying to excessive earners to pay for extra of the prices of the pandemic and make up for misplaced income.
Democratic lawmakers argue that the rich — who’ve largely escaped the financial hardship of the pandemic — ought to pay extra of the prices and assist those that have suffered most. Republicans and a few Democratic governors say tax hikes on the state stage will solely trigger the rich to maneuver to lower-tax states like Florida or Texas.
Together with New York, lawmakers in California, Illinois, Massachusetts, Maryland, Wisconsin, Hawaii, Oklahoma, Vermont have proposed numerous types of tax will increase on excessive earners, in keeping with the Nationwide Convention of State Legislatures. These states account for greater than a 3rd of the U.S. inhabitants, and practically half of the nation’s millionaires, in keeping with inhabitants information and wealth surveys.
Jackson Brainerd, senior coverage specialist with the Nationwide Convention of State Legislatures, mentioned he expects the tax hike motion will develop on the state stage.
“As we transfer additional into fiscal yr 2021, I anticipate that extra states will begin trying to elevate taxes to shut funds shortfalls, particularly if further federal support doesn’t materialize,” he mentioned.
Within the wake of the final the monetary disaster, eight states elevated taxes on excessive earners between 2010 and 2012, he mentioned. Whereas a few of these will increase had been non permanent, others — California’s millionaire tax — proceed to be prolonged.
The 2 greatest battlegrounds over the taxing the wealthy are Illinois and New York. In Illinois, billionaire governor J.B. Pritzker has spent greater than $50 million of his personal cash to support a ballot measure in November that will enable the state to impose a progressive revenue tax, which might tax larger earners at the next price, to exchange the state’s present flat revenue tax price. Billionaire hedge funder Ken Griffin has pledged $20 million of his personal cash to assist oppose the change, saying the state’s issues must be fastened with spending cuts and higher administration.
In New York, legislators are proposing larger revenue taxes and a “billionaire’s tax” that will yearly tax unrealized capital beneficial properties on these value $1 billion or extra. Many Democratic lawmakers are citing New Jersey’s new price — which at 10.75% is now larger than New York’s 8.82% — as a cause to boost taxes.
Gov. Andrew Cuomo opposes any tax hikes on the rich, saying it might solely trigger them to flee to decrease tax states. The highest 1% of earners pay 36% of New York’s revenue taxes and 46% of New York Metropolis’s revenue taxes, in keeping with E.J. McMahon, senior fellow on the Empire Middle for Public Coverage.
New York’s funds director, Robert Mujica, warned legislators final week that the majority New York millionaires and billionaires dwell and pay taxes in New York Metropolis, the place the mixed state and metropolis tax price is over 12.6% — larger than New Jersey’s new price.
“There may be a lot dialogue concerning the state and nation’s financial situation and the choices out there to New York State,” Mujica mentioned in a press release. “Let’s make sure that the discussions are knowledgeable.”
Individuals take part in a “March on Billionaires” occasion on July 17, 2020 in New York Metropolis.
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