They’re the golden geese of New York – a mere 41,282 taxpayers who account for nearly half the city’s income-tax collections – and some are bound to fly the coop if the rich get hammered with higher taxes, a top city official warned yesterday as a dire new report forecast more job losses, higher deficits and dwindling tax revenues.
“The basic concern is how do you collect revenue from New York City’s tax base if you have a relatively small group of individuals paying a very large proportion of your income-tax revenue and you demonstrate a policy that appears to be going after that sector particularly,” Mark Page, the city’s budget director, testified at a City Council budget hearing.
“You don’t need to lose many of them before ending up with less money than you had before you increased the tax.”
Officials later provided figures showing that 1 percent of taxpayers, or 41,282 filers earning $500,000 or more, paid 47.8 percent of the $7.3 billion collected by the city in income taxes.
The top half percent, or 19,387 filers with $1 million or more in taxable income, accounted for 40.6 percent.
Those in the upper income brackets face a potential double-whammy this year.
Council Speaker Christine Quinn has proposed boosting the city’s income tax from 3.65 to 4.25 percent for those earning at least $297,000; to 4.45 percent for folks making $532,000 and to 4.65 percent for the $1.2 million league and above.
At the same time, there’s a movement in Albany to raise the state income tax from 6.85 percent to 8.25 percent for people making a minimum of $250,000; 8.97 percent for those making $500,000 and above in taxable income and 10.3 percent for those at the $1-million-and-up level.
City Comptroller Bill Thompson, who is trying to unseat Mayor Bloomberg, reversed an earlier position and told the council he would support higher taxes at the top tier, $500,000 and above.
“We are in different times now,” he said, explaining the switch from his opposition in October.
Meanwhile, a new report by the Independent Budget Office estimated the city would lose 270,000 jobs between the first quarter of 2008 through the second quarter of 2010, roughly 30,000 more than it had projected in January.
The agency also said sharply declining tax revenues will undo the mayor’s January budget-balancing act and leave a gap of $1.2 billion in 2010 and $4.8 billion in 2011 – $1.6 billion more than the administration had expected two months ago.
At the council hearing, sparks flew as the discussion about tax policy grew testy, eventually devolving into all-out class warfare.
Councilwoman Letitia James (D-Brooklyn) argued that a higher income tax at the top end was fairer than the across-the-board sales tax hike proposed by Bloomberg.
Most New Yorkers, she said, “believe the wealthy should suffer some of this pain my constituents and unfortunately the vast majority of Brooklynites are feeling.”
“If you spoke to the wealthy in this town, they probably would not say they are doing tremendously well during the current economic circumstances as a crowd,” responded Page.
That didn’t sit too well with James, who was one of the loudest critics of the mayor’s plan to extend term limits.
“I’m not in a position to protect the wealthy,” she shot back. “I’ll leave that to the mayor of the city of New York,” a reference to Bloomberg’s opposition to tax-the-rich schemes.
Moments later, James asked Page about changes the city was proposing to day-care funding. She said they would impose a hardship on single-parent households.
When James demanded to know if Page came from a single-family home, as she did, he threatened to leave.
Finance Committee chairman David Weprin (D-Queens) ended the showdown by declaring James’ question inappropriate.