State of the Estate: Cuomo's Tax Giveaway to the Rich
In a State of the State address largely devoid of the progressive policy proposals he floated last year, New York Governor Andrew Cuomo decided this year to lay out a lavish buffet of tax cuts that disproportionately benefit large corporations and the rich. Cuomo is proposing $2 billion in "tax relief" phased in over three years, a package impressive enough to prompt the Republican State Senate Leader Dean Skelos to admiringly describe him as a "good, moderate Republican." (Rule of thumb in the age of hyper-partisanship: If a Republican calls you a Republican, you are probably a Republican.)
The supply-side economic theories that underlie Cuomo’s tax cut proposals have had fat cats laughing all the way to the bank since long before Arthur Laffer devised his dubious curve, despite the fact that these theories have been widely discredited. And yet the Governor is determined to throw his muscle behind them. True, he does toss a couple of bones to renters and middle-class property owners, but the bulk of his cuts are reserved for wealthy individuals and corporations, benefitting Wall Street banks more than the ordinary taxpayers and manufacturers they purport to champion. While the cuts are unlikely to significantly increase economic growth or create jobs, they are certain to deprive the state of much-needed revenue at a time when the administration itself projects a $1.7 billion deficit for the current fiscal year. They’re also sure to increase inequality in a state that already ranks No. 1 in the nation in that unfortunate category.
The most galling of Cuomo’s proposals, however, is a huge giveaway to the rich in the form of sharply reduced estate taxes. Currently, New York offers a $1 million estate tax exemption. In other words, wealthy New Yorkers can pass on an estate worth $1 million (after deductions) without paying a cent in estate taxes. For estates larger than $1 million, the rate starts at a whopping 5 percent and rises to all of 16 percent for estates larger than $10 million. (By comparison, workers in New York start paying a state income tax rate of 5 percent when they earn around $22,000.) Spouses are exempt from the estate tax, and a labyrinth of waivers, trusts and other exemptions allows wealthy individuals and their estate planners to shelter large portions of even the largest estates. Still, estate and gift taxes bring in over $1 billion annually, accounting for almost 2 percent of New York’s total tax revenue.
For Cuomo, this is apparently a grave injustice. He proposes increasing the estate tax exemption to $5.25 million and indexing future levels to inflation. (To my knowledge, he has not proposed indexing New York’s minimum wage to inflation, presumably because low-wage workers, unlike the scions of wealthy families, aren’t affected by inflation.) The proposed increase would bring the state in line with the federal exemption, which was permanently raised and indexed to inflation in 2012 when President Obama caved in to conservative lawmakers as part of the 'fiscal cliff deal.' Cuomo also proposes lowering the top estate tax rate from 16 percent to 10 percent, because someone who has just inherited more than $10 million couldn’t possibly be asked to give up that extra 6 percent.
More: Truthout
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