Property Tax Relief Starts with Income Tax Fairness
by Alan B. Lubin

When it comes to state income taxes, what does a gas station attendant or retail clerk on Long Island, struggling to pay bills and keep their homes, have in common with billionaire Donald Trump?

The answer isn’t a joke. Or, maybe it is. Because of New York’s misguided tax policies, Donald Trump and middle class teachers, salesmen, auto mechanics and cops in New York State pay state income taxes at the same exact rate.

It’s true. Working families on Long Island worrying about their rising property taxes and Wall Street’s wealthiest financiers, who worry about whatever multi-millionaires worry about, pay the same top rate of 6.85 percent, a tax bracket that kicks in at just $40,000 in adjusted income for married couples.

New York State United Teachers is pushing state leaders to restore sanity and balance to the state’s tax code. It’s the best and fairest way to lower the property tax burden on New York residents and ensure that our public schools are properly funded.

A study by the Fiscal Policy Institute, an upstate economic think tank, shows that if New York would simply revert back to its 1972 tax brackets and tweak them to adjust for inflation, it could give 95 percent of New York families a tax cut, while generating nearly $8 billion more each year for the state budget. The $8 billion in additional revenue could be used for better roads and bridges, crime prevention, public education and meaningful property tax relief.

During the last 20 years, much of the income growth in New York and the United States has been concentrated at the top end. Over those last two decades, a huge gap has opened between the rich and poor, to the point where New York now has the most unequal income distribution of any state.

Because of New York’s imbalanced tax burden, the super-rich – those in the top 5 percent of earners – have laughed all the way to the bank, enjoying huge tax breaks while the poor and middle class have benefited very little.

How so? Since the 1970s, the state has gradually flattened the state income tax brackets to provide tax relief to people who don’t need it. In 1972, New York had a progressive tax code with 14 brackets, ranging from a low of 2 percent to a high of 15 percent. It provided fairness to the poor and middle class, and it expected the biggest earners and richest families to pay a little more. After all, the state figured, they could well afford it.

Now, however, there are just five brackets and five tax rates, ranging from 4 percent to 6.85 percent, and middle class families are stuck paying higher taxes than they should.

According to the Fiscal Policy Institute, the compressed brackets mean a family of four with an income of $50,000 is paying about $1,000 more in income taxes a year. The biggest losers are families earning about $150,000 a year. Those families pay about $2,500 a year more under the current five-bracket, 6.85% percent tax code than they would under the 1972 tax code, with 14 brackets and a top rate of 15 percent.

On the flip side, a wealthy family earning $500,000 is now paying $22,000 less a year in taxes than it would under the 1972 code, while those earning $1 million are saving an additional $63,000.

The Business Council of New York State is opposed to income tax reform. It represents big corporations that pay their CEOs millions of dollars a year. Don’t buy for a New York minute that old canard that raising the income tax would drive business out of state. Does anyone really believe that Wall Street’s biggest earners would rather live in Boise?

Frustration across the state over rising property taxes is understandable. Yet, most would agree that most schools in New York State, as a whole, do a pretty terrific job.. Cutting school programs, laying off teachers and voting down school budgets isn’t the answer. New Yorkers’ faith in its public schools was reaffirmed this May, when close to 90 percent of school budgets passed as voters voluntarily raise their own taxes to keep public schools strong.

Of course, there is a better way to keep our schools well-funded and provide property tax relief and income tax relief for 95 percent of New York families. All we have to do is restore some fairness and equity to our state’s income tax rates. It make sense, and Donald Trump can afford it.

Alan B. Lubin is executive vice president of the 575,000-member New York State United Teachers.