New York State’s highest individual earners and largest corporations may soon see an increase in their tax rates, while managed care organizations may have to pay a new tax under budget resolutions approved on Thursday, March 14th by the New York State Senate and Assembly.
The budget resolutions outline the legislature’s spending and policy priorities ahead of the upcoming April 1st budget deadline, but also set the New York State legislature’s Democratic supermajorities at odds with Governor Hochul (D), who has called raising tax rates a “nonstarter.” It should be duly noted that New York already has one of the highest state and local tax rates in the country and elected officials are deeply concerned about increasing taxes that could cause even more New York residents to move to lower-tax states and / or no-tax states. New York State Comptroller DiNapoli warned about the significant number of taxpayers leaving New York State year-over-year since the COVID-19 pandemic started unfolding back in January of 2020. DiNapoli said New York has become increasingly reliant on nonresident tax filers, the majority of whom earn more than $ 1 million, and that those who move eventually take their incomes with them. However, the mass exodus out of New York State has not been confined to the ultra-wealthy as the highest level of taxpayer migration out of New York State occurred amongst individual taxpayers within the middle-class to the upper middle-class earning between $100,000 and $500,000 respectively. This is especially troubling as New York’s personal income tax collections are its largest revenue source and are heavily reliant on high-income earners that have been leaving New York at unprecedented levels starting in 2020 through the present.
Lawmakers in both chambers also backed a new tax on managed care organizations, which would allow New York State to get matching Federal-Level funds from the Centers for Medicare and Medicaid Services. The Assembly indicated “revenue generated by the state would be used to repay the tax obligation for each plan, but that it expects to get $4 billion in increased Federal Medicaid revenue”.
Have a question? Contact Peter Scalise, SAX LLP
