A new report from the Institute on Taxation and Economic Policy (ITEP) recently found that New York State is home to the highest concentration of extreme wealth in the United States. New York State also has the greatest income inequality in the United States. By both of these measures, New York is the most unequal state in the nation.
The Fiscal Policy Institute’s latest brief, Inequality in New York and Options for Progressive Tax Reform, details ITEP’s findings as they apply to New York State, reviews additional research and data on New York State’s income and wealth inequality, and lays out their implications for New York State tax policy.
Key findings include:
- New Yorkers worth over $30 million collectively own $6.7 trillion in wealth. These ultra-rich New Yorkers are just 0.4 percent of the state population.
- New York’s ultra-rich also hold about one-fifth of the total wealth held by all ultra-rich Americans — the highest concentration of wealth in any state.
- Of the $6.7 trillion held by ultra-rich New Yorkers, ITEP estimates that $3.1 trillion consists of unrealized capital gains. Much of this wealth will never be taxed under current law.
New York State tax implications include:
- New York’s current tax system, taken as a whole, is regressive: the wealthy pay about the same combined state and local tax rate as the bottom 40 percent.
- Because of the substantial overlap between high income earners and owners of extreme wealth, increasing the progressivity of the existing Personal Income Tax would help to address extreme inequality.
- At a minimum, the state should not allow the current PIT rates on high earners to expire, as they are currently set to, in 2027.
- New York can further address extreme inequality, and increase the overall progressivity of its tax system, through a number of tax policy options, including:
- Increasing tax rates on long-term capital gains for high-income taxpayers
- Taxing unrealized capital gains on a mark-to-market basis for wealthy taxpayers
- Increasing taxes on business profits, such as those earned through pass-through entities such as LLCs, and targeting the profit-shifting of multinational corporations
- Taxing inherited wealth, or fixing the estate tax by lowering the exemption threshold and eliminating step-up in basis
- Revising the state constitution to permit a direct wealth tax
This will be relevant after December 6, 2022, when “Invest in Our New York” establishes its strategy/agenda for the legislative session.
Geraldine R. Maslanka
Any ideas on how to get rid of Rich Shaffer and Jay Jacobs?
We’re a national embarrassment here on Long Island.
Enactment of these tax proposals would turn New York red for decades. It’s hard to understand why these are still being embraced in light of the electoral disaster last Tuesday. I can remember back in 2016 when this group first came together one of the idea was to try to tag Zeldin with a pocketbook issue. I do not understand the logic of handing an electoryal windfall to the GOP. I hope saner heads prevail in Albany.
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