NY Progressives Want to Tax the Rich. Does Governor Hochul?
"We voted for you, we're gonna come for you."
4:51 PM EST on December 6, 2022
Way back in January, Robert Mujica, one of the most powerful people in New York state government and its longtime budget director, was asked if the income tax increases on wealthy New Yorkers that were passed in 2021 had resulted in the ultra-rich fleeing the state.
"We haven't seen any evidence of that," Mujica told reporters.
The Ducati-driving Cuomo appointee stepped down from his post earlier this fall, but he (along with his old boss) had been one of the biggest proponents of the idea that taxing New York's stable of obscenely wealthy residents was bad policy, because they would just up and leave.
Now, the progressive state lawmakers and community groups who fought for those 2021 increases are pointing to the apparent demise of this truism—and massive corporate windfalls—as reasons to keep ratcheting up taxes on the wealthy, which could raise at least $40 billion and pay for things like universal childcare and a new rental voucher program.
"Homelessness is a choice, and it is a choice that you see made annually in the state budget," Queens Assemblymember Zohran Mamdani said at a rally for the tax increases on Tuesday outside of City Hall. "The ways in which working people are suffering in this state, those are choices being made up in Albany. It is not fated, it is not destined, and it is not natural. And that is why we can change it this year."
The 2021 tax increases created new temporary tax brackets for New Yorkers earning over $1 million, $5 million, and $25 million, but the Invest in Our NY coalition wants to make those permanent, and create even more brackets across the spectrum of the top five percent of taxpayers. They're also seeking to extend the higher corporate tax rates that are supposed to expire next year. Both of these actions would raise $24 billion, according to the group. A tax on inheritances above $5 million and a tax that would treat capital gains like income would raise another $15 billion.
Most ambitiously, they are calling for a novel kind of wealth tax on unrealized capital gains—generally, unsold stocks and bonds, but art, jewelry, and crypto can count too—that would theoretically raise $34 billion in its first year of implementation.
If some of these proposals sound familiar, it's because they're the same bills the group tried and failed to get through in 2021.
The economy is currently much weirder and more volatile than it was in 2020 or 2021, federal pandemic relief is dwindling, and New York City's political leaders are already in austerity mode, even as spending keeps creeping up. A state comptroller analysis from earlier this year showed that between 2015 and 2019, the people in the $100,000 to $499,000 tax bracket were the most susceptible to migration—mostly out of the range of the progressives' proposals, but not entirely.
Yet wealth in the Empire State has continued to accrete at the top. According to a recent report from the Institute on Taxation and Economic Policy, the 0.4 percent of New Yorkers whose individual net worth is more than $30 million collectively own some $6.7 trillion in wealth, the highest concentration of any state in the country; almost half of that wealth is unrealized capital gains.
During her first budget process earlier this year, Governor Kathy Hochul insisted she was not interested in raising taxes. She also found $1 billion in state money for a new football stadium, and $10 billion for microchip manufacturers.
Hell Gate asked the governor whether she'd support new taxes on the ultra-rich, but her spokesperson, Avi Small, did not directly address the proposals, or taxes, at all.
"Governor Hochul's first budget included record investments in public education, health care, housing and social services, and we look forward to releasing details of the Governor's State of the State and Executive Budget next month," Small wrote in an email.
"We will be meeting with the members of the Assembly majority and discussing many issues with them as we head into the 2023 session," said Mike Whyland, a spokesperson for Assembly Speaker Carl Heastie. A rep for State Senate Majority Leader Andrea Stewart-Cousins did not respond to our request for comment.
While some conservative Democrats have cited Hochul's poor showing in the general election as evidence of the electorate's disinterest in progressive policy, Brooklyn State Senator Jabari Brisport told Hell Gate that they have it backwards.
"Hochul did poorly because she failed to distinguish herself from her Republican opponent with a clear progressive agenda, and because she failed to do things that would excite the working class," Brisport said. "Things like Good Cause eviction, taxing the rich, poll really, really well—better than Hochul did. The environmental bond act polled better than Hochul did."
Winsome Pendergrass, a housing activist for New York Communities for Change, was more pointed in her remarks at the rally.
"We're standing here today to send a message to Kathy Hochul: Don't take us for fucking granted!" Pendergrass said to cheers. "We voted for you, we're gonna come for you."
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