By State Senator Daniel Squadron and Assemblyman Rory Lancman
Last week, our op-ed, 'Beyond the Occupation,' prompted a number of responses. In particular, the Manhattan Institute's E.J. McMahon took to the New York Post with an op-ed titled 'The many myths of the millionaire tax.' As the debate over the millionaire's tax continues, we would like to clarify a few key points.
Mr. McMahon focuses on which party held the governor's office while New York state's tax code was progressively made more regressive; but that focus is misplaced. It was, after all, Republican tax policy guru Grover Norquist who made it an article of conservative faith "to reduce [government] to the size where I can drag it into the bathroom and drown it in the bathtub," by no longer asking for a fair contribution from America's wealthiest citizens, demanding comparatively higher taxes from middle-class and working families, and creating a new political imperative to starve government.
As to McMahon's challenge to the widely accepted fact that middle class Americans pay more in federal, state and local taxes as a share of their income than do America's wealthiest citizens, we are tempted to tell him to take it up with Warren Buffett, who has publicly expressed his disgust that his secretary has a higher share of her income taxed than he does. In any event, the sad fact is that even after including the income tax paid by New York City residents in the calculation, the top 1% of earners in New York state pay, on average, only 7.2% of their income in state and local taxes after federal deductions, while the middle 20% of earners pay 11.6% of their income.
Mr. McMahon also criticizes the extent to which New York relies on its wealthiest citizens for most of its revenue because of the potential volatility resulting from Wall Street's periodic crashes. But he misses these fundamental points: New York has become more reliant on the wealthiest five percent of taxpayers because this small group takes in half of all income in the state, up from 30 percent of income in the state 20 years ago. At the same time, the wealthiest are now paying a lower percentage in taxes than they did for decades.
The undisputed facts are that New York's highest marginal tax rate was cut by almost two-thirds between 1977 and 1997. And, without the high-income surcharge, the state's highest marginal income tax rate kicks in for couples paying taxes on over $40,000 -- the same rate applied to someone making $10 million.
Facts are facts, and sadly for New York's middle class taxpayers, math is math.