Tax the Wealthiest New Yorkers and Invest in Our New York
By Ana Maria Archila
Today is Tax Day, the deadline by which all New Yorkers must file their taxes. Tax Day should be a day when New Yorkers of all income levels contribute to keep our state running. Instead, today marks another day when the rich get richer and the poor get poorer. That is because, under our state’s current tax system, the rich pay less than their fair share of taxes while benefiting enormously from how public funds are used.
Take Stephen Schwarzman, the private-equity billionaire whose wealth increased by more than $5 billion in just seven weeks near the start of 2021. His sudden jump in wealth came from a rapid increase in the price of his ownership stake in Blackstone, a buyout firm with a history of legally dubious tax avoidance strategies. Because New York doesn’t have a wealth tax – our state only taxes billionaires when they sell their assets or otherwise realize the gains in their wealth – Schwarzman likely won’t be paying any new taxes on this $5 billion windfall this Tax Day. In fact, according to a New York Times investigation, despite being the 37th wealthiest person in America and the third wealthiest New Yorker – Schwarzman likely pays taxes at the same rate as a working class New Yorker.
If underpaying on their taxes wasn't enough, billionaires have been raiding New York’s coffers these past few months. Terry Pegula, the Florida-based fracked gas billionaire who owns the Buffalo Bills football team, saw his net-worth shoot up $400 million during the pandemic. Yet he still had the gall to beg New York for an $850 million subsidy for a new stadium for his team. Amazingly, Governor Hochul granted Pegula’s request, giving him probably the largest-ever public subsidy for a football stadium.
This is a moment of intense economic hardship for millions of New Yorkers, a time when we should be focused on investing in affordable housing, health care, and child care for all, and addressing the climate crisis. It is simply immoral that our state does so much for those who give so little – and so little for those who give so much. We need a tax system that works for all of us, not just the wealthy few.
Last year, in response to years of public pressure and the dire economic circumstances caused by the coronavirus, our State Legislature created new tax brackets for individuals earning over $1M and $5M. This generated critical revenue to fund vital services for working families and struggling people across the state, including relief for tenants and homeowners, major investments in public education, and a fund for excluded workers. Now it is time to build on that important victory by overhauling our tax system to make it fair for all.
Here are three ideas to get started.
First, we need to put an end to a property tax system that burdens working and middle class families and asks little of wealthy property owners. A Bloomberg News investigation late last year showed how a wealthy Williamsburg condo owner can pay 200 times less in property taxes than a working class family who owns a condo in the Bronx. It’s time to create a more progressive property tax system.
Second, as Scharzman’s story illustrates, we need to move beyond just taxing billionaire’s income to also taxing their wealth. Many billionaires earn comparatively little in terms of annual income. For example, between 2014 and 2018, Michael Bloomberg – New York’s richest person—saw his wealth increase $22.5 billion but reported a much smaller $10 billion in income. This means more than half of Bloomberg’s windfall was likely not subject to state taxes. New York should pass a billionaires tax that covers wealth gains like this.
Finally, we need to pass a state heirs tax to ensure that this generation’s wealth inequalities do not continue into the next. When billionaires pass away, their massive fortunes should be subject to taxation, so wealth isn’t concentrated within a handful of families.
This policy list is not exhaustive – there are additional ways to make the tax system more progressive – but these three ideas would be transformative.
Paid lobbyists for the ultra-rich will tell us any move to establish fair taxes will chase away the millionaires and billionaires, but they've been saying that for decades and it just isn't true.
New York has continued to add more millionaires and billionaires every time we tax them more, and academic research shows that rich folks flock to dynamic economically and culturally vibrant places like New York.
What’s more, there was a time when New York taxed its wealthiest residents and Wall Street at much higher levels. During the 1950s and 1960s, those higher tax rates helped fund some of New York’s most transformative investments, like making CUNY and SUNY free, building Mitchell-Lama housing, and more. We can and should make similar investments now.
One in five New York families cannot afford to pay their utility bills. Working and middle class families are struggling with housing, childcare and healthcare costs. Unprecedented storms due to climate change are ravaging communities. At a time like this, we need increased tax revenues to provide affordable housing, utility debt relief, universal childcare, and to transition to a clean energy economy.
These are not luxuries that would be nice-to-have for working and middle class families. Rather, utilities, housing, and healthcare are the essentials of a basic standard of living. If we had a tax system that was just – in which everyone paid and received their fair share – our state would be able to ensure everyone has what they need to thrive.
Ana Maria Archila (@AnaMariaforNY) is a Democratic candidate for Lieutenant Governor of New York, is the former Co-Executive Director of Make the Road New York and the Center for Popular Democracy, and if elected would be the first Latina and first LGBTQI+ person elected statewide in New York.