At a time when New York City's middle class and working families are working harder than ever to make ends meet -- but falling farther behind -- there is no justification for a city income tax code that penalizes them so unfairly. Right now, a school teacher making $50,000 a year is in the same tax bracket as a CEO earning $500,000 a year.
How do we look a beat cop in the eye and tell him he's paying the same local tax rate as a $500 an hour lawyer?
We can't and we shouldn't. It's time to reform New York City's deeply inequitable income tax code.
As I travel through the neighborhoods of this city, I hear a similar message from New Yorkers: It's harder than ever to live here and raise a family, they tell me, because the cost of everything is going up. We've always wanted to believe that by working hard, you can still get ahead in this city. But we don't know if we can believe that anymore.
I hear these concerns -- and they can't be ignored.
Just a few months ago, Gov. Cuomo restored some sanity to the state's income tax system. He knew something was wrong when millionaires were about to pay the same rate as families at the bottom of the ladder. So he created three new income brackets at the state level and cut taxes on families making less than $300,000 a year.
Today, I am proposing that the city do the same.
We need to overhaul our city income tax code to make it more graduated and progressive. And we need to give a little back to middle class families, who over the last 10 years have seen the price of everything go up -- and not just big-ticket items like housing, healthcare and college tuition. Compare today to the year 2000: A 30-day MetroCard is up 65%. Water and sewer rates have surged 144%. Heating oil has spiked 200%, and a gallon of gas is nearly triple the price. Meanwhile, salaries and benefits have simply not kept pace. My plan, reviewed by the Independent Budget Office (IBO) and scored revenue neutral, would give a little back to working people by creating three new tax brackets. It would reduce taxes for families making less than $300,000 and individuals making less than $200,000, in line with Gov. Cuomo's plan. Families earning between $300,000 and $1 million (and individuals with incomes between $200,000 and $1 million) would not pay another penny in taxes. Under this proposal, the only people who would see a tax increase are those making $1 million a more per year, but even the highest earners would see rates rise less than 0.5%. If we do this, 95% percent of New Yorkers would see a tax cut, with the bulk of the savings going to those who need it the most. As it stands, New York City is home to the steepest income inequality in the nation. Today, the top 20 percent of income earners in Manhattan make nearly 38 times as much as the bottom 20 percent -- the greatest differential in the country.
We should reward success in New York City. But it is time for the very highest earners to pay their fair share, and to create a tax system that gives a little back to middle class New Yorkers. A well-balanced plan like this could return more than $300 per year to middle class and working families -- not enough to make New York truly affordable, for sure, but a good place to start. State Sen. Adriano Espaillat and Assemblymember Robert Rodriguez are already drafting legislation to move this plan forward in Albany, because what's good for the state should be good for the city.
We should create a City income tax system that restores basic fairness. A City built on the middle class deserves a government that stands up for middle class New Yorkers.