New York will need to raise taxes to plug an $8.7billion black hole caused by the COVID-19 crisis, Gov. Andrew Cuomo has announced, just months after he rejected calls for tax hikes and begged the rich to return to the city saying he would cook them dinner and buy them a drink.
The three-term Democratic governor said on Wednesday that the state was facing several thousand layoffs, increased taxes, fares, tolls and government borrowing with ‘devastating’ consequences if Congress does not agree to provide aid.
The 63-year-old added that the state would need to raise taxes even if federal aid was approved in order to bridge its current projected deficit bill of $30billion over the next two years.
‘If Washington gives us some of it, then we’re going to have to redo a budget,’ Cuomo said during a briefing with reporters.
‘We’re going to have to raise taxes — I believe we’re going to have to raise taxes, at the end of the day, in any event. The question is, how much in tax?’
Cuomo and aides stopped short of indicating where the hikes would hit specifically, with the governor adding that general tax increases ‘would hurt families and hurt the economy’, as reported by The Wall Street Journal.
New York Governor Andrew Cuomo, pictured on December 7, said in a press conference on Wednesday that the state would need to raise taxes as a result of the economic downturn caused by COVID-19
Taxi drivers gathered in New York City on Thursday morning to protest their rights and call for greater taxation of the rich, before caravaning to Washington, D.C, to call for a great stimulus program
Around 420,000 of the city’s wealthiest residents left during lockdown in the spring for second homes in the Hamptons, Connecticut and Hudson Valley, contributing to an economic downturn. Pictured an empty New York City Times Square subway in March.
Empty tables sit outside a restaurant in Brooklyn on December 9. If COVID-19 rates continue to climb then Gov Cuomo is threatening to close indoor dining- one of the most important business sectors which is already closing due to various health restrictions, a lack of tourism and the disappearance of business and wealthy clients
The announcement marks a dramatic shift in tone for Cuomo who had initially resisted suggestions of raising taxes on the state’s wealthiest residents, saying doing so would only drive billionaires out for good.
Thousands of New York City residents fled Manhattan and Brooklyn earlier this year when the city was the COVID-19 epicenter of the world.
By May an estimated 420,000 of the city’s top 1-2 percent – who are responsible for half the state’s income taxes- had left.
Many flocked to their second homes in the Hamptons or upstate, while others rented or bought new properties, abandoning their expensive city apartments, fearing a tax hike.
In July, a ‘March on Billionaires’ took place in the city with placards calling for Cuomo to ‘tax the rich’.
Later, representative Alexandria Ocasio-Cortez, a Democrat who represents parts of the Bronx and Queens, threw her weight behind a wealth tax and said in a video on Twitter: ‘Governor Cuomo, we need you to pass a billionaire’s tax, in order to make sure that we’re providing for our working families. It’s time to stop protecting billionaires, and it’s time to start working for working families.’
At a press conference he said: ‘I literally talk to people all day long who are in their Hamptons house who also lived here, or in their Hudson Valley house or in their Connecticut weekend house, and I say, “You gotta come back, when are you coming back?”
‘We’ll go to dinner, I’ll buy you a drink. Come over, I’ll cook.’
He added: ‘They’re not coming back right now. And you know what else they’re thinking? If I stay there, I pay a lower income tax because they don’t pay the New York City surcharge.’
In the Hamptons, stores and restaurants enjoyed a bustling trade from the well-heeled city dwellers who fled there. Pictured, the village of Sag Harbor, in June
US Representative Alexandria Ocasio-Cortez, pictured in the US Capitol in Washington, DC, on December 8, has backed calls to ‘tax the rich’
NYC MILLIONAIRES FLED FOR SMALLER TOWNS
- Nearly 420,000 New York City residents left between March 1 and May 1
- Neighborhoods such as the Upper East Side and SoHo saw populations drop by at least 40%
- People fled to Long Island, upstate New York like the Catskills and Florida, the Hamptons, Connecticut and Hudson Valley, all of which are popular summer home destinations
- Residents who left were in neighborhoods made up of mainly whites with household incomes of more than $100,000 per year
Cuomo, however, has been pressing the federal government to dole out more aid to the states – a request that has so far gone unfulfilled as lawmakers have been unable to find common ground on a stimulus package.
Ocasio-Cortez (D-NY) is calling voters to pressure Gov. Andrew Cuomo and state lawmakers to approve up to $50 billion in tax hikes on the wealthy to avoid deep service cuts to schools and the needy to close massive projected COVID-19 related deficits.
State lawmakers adopted a $178 billion budget in April that depended upon additional federal aid that hasn’t materialized.
New York state’s budget office estimated in October that the coronavirus is responsible for a $13.5 billion drop in state revenue from its February projections.
New York is projecting an $8.7 billion deficit for the fiscal year that begins on April 1.
That figure could almost double, because it assumes the state will find $8 billion in recurring savings in its current fiscal year, according to David Friedfel, director of state studies for the Citizens Budget Commission, a fiscal watchdog group.
Almost half of the state’s revenue comes from its personal income tax, which is projected to bring in around $60 billion before refunds in both the current and upcoming fiscal years, budget documents show.
‘New York is one of the highest taxed states in the nation, and raising taxes will result in the continuation of the exodus from this state,’ Senate Minority Leader Robert Ortt, a Republican from Niagara County, said in a statement.
Michael Kink, executive director of Strong Economy for All, a coalition of labor unions, said Cuomo should take an all-of-the-above approach to raising revenue before resorting to cuts.
‘The governor has landed firmly in reality,’ Mr. Kink said. ‘It’s absolutely true that tax hikes on the rich, on Wall Street and on big corporations are an essential part of any resolution to the budget crisis. We absolutely should not give up on federal funding, but we do need real relief now.’