For over 40 years, I have been advocating to reduce the unfair tax burden on rural property owners. It just is not right that Albany pushes the cost of funding Medicaid onto the shoulders of rural residents through taxes on our homes, businesses and farms. And, the quality of education for our children should not be determined by the economic strength of the community they happen to be born into. These inequities need to change, and the opportunity to change them is now.
The massive deficits and economic upheaval in our communities created by the COVID crisis will require policy makers in Albany to take bold steps.
Now, with so many people unemployed, and so many businesses struggling to survive, the current system relying on property taxes to support essential services like education and rural healthcare facilities cannot continue.
The economic shut down from the COVID pandemic clearly exposes the incredible inequities of this system. If we don't fix it, property taxes will not be reduced because you are now unemployed, or your business was shut down. That’s why we need advocates for upstate taxpayers in the majority conference.
Foremost, the Federal government must step in, not only to assist the state, but also our towns and counties. This is not a handout. New York is among a small handful of states that sends more revenue to the federal government than it receives in federal support.
Each year, New York taxpayers send about $26 billion more to the federal government than we receive. All we’re asking is that the Federal government give us our money back.
At the same time, we must rethink how we pay for our schools and medical institutions - let’s get it right.
Schools, Medicaid, and county operations are funded largely through property taxes in our rural counties. But those taxes are a remnant of an outdated system and have little relationship to someone’s ability to pay them. Taxpayers suffer, and so do our local communities.
A fair tax system must be based on how much someone earns and what they can afford to pay. Tax loopholes and fancy accounting gimmicks allow the super wealthy - predominantly New York City residents - to pay a lower tax rate on their earnings than the rest of us who earn our living through a paycheck or through the cash register of our business. That is unfair.
In New York, we can and must close these loopholes and make sure that large financial institutions and the super wealthy pay their fair share.
Let’s stop subsidizing the super wealthy and instead, create a system that is fair to the people who are self-employed, run a small business, seniors, or earn their living through a paycheck.
A six-point tax policy to level the playing field, and take the burden off of working families, seniors, and small businesses.
1. A circuit-breaker on New York property taxes for working families, small businesses and retirees
We need to ensure that people can afford to stay in their homes and keep their farms. A circuit-breaker on New York families would mean that taxes on their primary residence or business would be capped at a reasonable percentage of their income.
2. Create a level playing field for NY businesses by fairly taxing Multinational Corporations operating in our state.
An increase in the in-state corporate tax on large multinational companies can be used to provide a matching 40% decrease in state corporate tax for small NY businesses.
3. Close the Carried Interest Loophole:
Hedge fund managers and private equity firms charge a fee for investing other peoples' money. Under federal and state tax laws, this fee can be considered as “carried interest" which is taxed at a much lower rate than the income you earn through your paycheck. This “Carried Interest Loophole” is the reason that Warren Buffett famously pays a lower tax rate than his secretary.
Apply a state-level surtax, also called a Carried Interest Fairness Fee, which will ensure that private equity and hedge fund managers pay at least the same tax rate on their income as truck drivers and teachers. ~3.5 billion in annual revenue
4. Implement a tax when companies buy back their own stock and eliminate the rebate on the stock transfer tax:
When companies repurchase their own shares from the marketplace, those shares are absorbed by the company, which reduces the number of outstanding shares, and thus increases the ownership value of each investor share.
Implement a Stock Buy Back Tax and stop rebating the Stock Transfer Tax. The stock transfer tax is basically a sales tax on the transfer of shares of stock which the state currently rebates 100%, a stock buyback tax - which many Republicans and Democrats support - will keep corporations from using our tax dollars to enrich themselves. ~15.8 billion in annual revenue
5. Address the federal loophole for high-dollar pass-through business income:
Billionaire real estate investors, hedge funds and private equity funds, received a special loophole for high-dollar pass-through business income in the 2018 tax bill that slashed their tax rates.
NY can implement a surtax on high-dollar pass-through business income to recoup the revenue lost from the federal tax policy. Revenue raised should go to offset taxes on small businesses and farms.
6. The super wealthy can afford to pay a little more to help all our towns do a little better:
The Federal Reserve reports that the top 1% of families in the United States control a record-high and still growing percent of the wealth. In fact, nearly twice as much wealth as all of us combined, living and working in the first 90% of the population. The federal “tax reform bill” transferred tremendous wealth to the top 1%, while limiting the state and local tax deductions for those of us living and working in NY state.
A slightly higher income tax bracket on the super wealthy - the top 0.1% earning over $5 million per year - will help NY support the education, healthcare, and job creating small businesses we all want and need in our communities. ~1 billion in annual revenue
Many local governments have been hit hard by the COVID crisis, and I commend their swift and nimble response to this unprecedented time of dealing with a major health crisis while managing shrinking revenue and budgets.
One thing local municipalities need now is time. Time to assess the long-range economic conditions, and time to institute changes in revenue and spending plans. This is where assistance from the federal and state governments can really help local governments recover from the forced shut down related to the COVID pandemic.
There will be tremendous budget short falls in many upstate counties; some more severe than others. Most municipalities are laying off workers, which adds to the emotional strain on our neighbors and further deepens the economic impact that high unemployment has on our communities.
The Federal and state governments can and should help. The Federal government has an obligation to help make our counties and local governments financially whole. And there is also an important role for the State in helping local governments get through this difficult time. That’s why I have a four-point plan to support local governments.
A four-point policy to protect and support our local governments.
1. Provide Low and zero interest loans of up to 6 years, from the federal and state government
This would give local municipalities the time they need to spread out the cost of the pandemic. Budget decisions could be made over time, with better information and a sound understanding of the impact the COVID crisis will have on normal revenue streams. These loans would reduce the number of lay-offs in the short-term as long range plans are formulated with a better understanding of what the future holds.
2. Make winter recovery funds from the state permanent
Our roads are still going to need repair, despite the severe revenue constraints in many counties and municipalities. That’s why the state should commit to and make permanent winter recovery funds, so essential for filling potholes and ensuring the safety of our roads. Making these funds permanent will allow communities to plan for road repairs.
3. Allow municipalities to own renewable energy production
The COVID crisis has shown the dangers of municipalities relying on single revenue streams like tourism. Allowing municipalities to own renewable energy production like solar farms will not only help us meet our clean energy goals, but will keep the revenue generated in the local community.
4. Extend the repayment period for Revenue Anticipation Note (RAN) Tax Anticipation Note (TAN) and Bond Anticipation Note (BAN) Loans
These loans allow local governments to borrow money from anticipated revenue, which is crucial right now. However, the repayment period for these loans is generally a year. Senate Bill S0847 would begin to address this and should be passed as soon as possible. Local governments need more time right now. Let’s give it to them.