On Tuesday, Gov. Andrew Cuomo announced a deal on a tax reform plan that created a new set of marginal tax rates and eliminated the so-called millionaire’s tax, a surcharge on the highest earners. As we noted yesterday, the agreement was widely described in news accounts as a populist breakthrough, a blueprint for raising revenues by forcing the rich to pay more.
Last night the New York State Senate approved the measure revising the tax code, followed by the Assembly in the early morning, and for the first time details emerged of precisely how the new tax code will work. These numbers tell a different story from the narrative that has developed surrounding the bill.
To some degree, it’s a question of which standard is used for comparison. Cuomo’s bill increases taxes on the wealthy when compared with simply allowing the “millionaire’s tax” to expire — which would have happened if Cuomo and the legislature had failed to act at all. But it has lower rates for high earners than those established in the current tax code.
We’ve created a chart comparing the tax liability at different levels of income under the current system with taxes under Cuomo’s revised code. Here’s what we found:
|Individual tax bill
(old / new)
|Married/Joint tax bill
(old / new)
|$20,000||$973 / $973||$820 / $820|
|$50,000||$3,028 / $2,908||$2,631 / $2,591|
|$100,000||$6,453 / $6,183.50||$6,056 / $5,816|
|$500,000||$36,853 / $33,383||$35,456 / $32,716|
|$1,000,000||$81,703 / $67,633||$80,306 / $66,966|
|$5,000,000||$440,503 / $420,433||$439,106 / $400,066|
|$10,000,000||$889,003 / $861,433||$887,606 / $841,066|
Data: Sasha Chavkin, Table: Michael Keller
Source: New York World calculation using Sections 601(a) and (c) of the tax code and the corresponding rates of the new legislation.
Note: “Old” plan tax bill calculation includes “millionaire’s tax” surcharge for high earners; “New” does not.
As the chart indicates, Cuomo’s plan lowers taxes across the board when compared with the system currently in place. But some of the steepest cuts benefit high earners. Individuals with annual incomes of $1 million will enjoy a $14,070 tax cut, while married couples with $1 million in income will save $13,340. And at a stratospheric $5 million in income per year, individuals will get a tax cut of $20,070 and married couples will save $39,040.
In our post yesterday, we erroneously overstated the amount that a $5 million earner would save under Cuomo’s plan due to a mathematical error. But with the emergence of the details on how the plan will work, we recalculated our totals — and found substantial savings for those at the highest end of the spectrum.