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WPCNR QUILL & EYESHADE. News & Comment by John F. Bailey. December 12,2011 UPDATED December 16, 2011:
Bah, humbug!
Have any of the financial wizards in the business press, and those economist pundits got their calculators out and analyzed Albany new tax rates and noted the “Bonus Money” the New York legislature and Governor have just sent to those struggling “Middle Class Taxpayers” making from $300,000 to $2 million a year?
Has anyone dared to point that the legislature and the state’s leaders have a hell of a nerve to say this is a “middle class” tax cut?
No.
All we hear is praise for the Governor and the legislature for making New York more attractive to business, giving tax relief to the struggling middle class taxpayer.
Struggling middle class? Surely the Albany Santa must be kidding.
You do not need an accountant to smell this pre-election year ploy.
How can you cut revenue when your revenues are down?
Across America the Governor and his partners-in-spin would have you believe that persons making over $300,000 to $2 million adjusted gross income are “middle class,” deserving of tax reductions of up to $40,000 (at the $1,999,999 level) on their state income taxes.
Do they take us for fools?
Yes, obviously.
They have disrespected us just so they can claim next election day that they lowered our taxes. But, watch your property taxes folks!
Watch those property taxes soar when towns and counties and school districts have to cope with drastic state cuts in aid for schools communities and counties in the 2012-13 budget.
Let’s talk middle class for a moment. What it is and is not.
People who were making $100,000 in the 1990s—a mere 10 years ago were living well,and if they had two incomes of $100,000 each , they lived even better. If they kept their debt under control, or even ran it up they lived well. If they used their heads and paid off a mortgage and saved, they could even have saved for childrens’ education, and still had plenty of discretionary income. They were in no way middle class—they were upper middle class.
Let’s compare the real middle class and the lower classes and see how much Albany’s stocking stuffers in tax cuts passed last week does for those who are strugglin’..
You would think that larger proportionate tax dollars would be given back to the lower income folks, wouldn’t you? There are more of the lower class, after all.
Well that is not the case with Mr. Albany’s taxcuts.
Far from it.
If you’re a politician, you have to take care of the richies first.
The tax cut for the “struggling middle classes” making $150,000 to $1,999,000 in adjusted gross income is a range of 1/5th of 1 % to 1% cent in the state tax rate.
1/5th of 1 per cent to 1%.
That is a mighty axe because the new rate applies to a much wider income universe.
As WPCNR takes you through the tax structure, I have not adjusted the rates based on last year’s breakpoints of the graduated state tax rates for those earning $300,000 or more of this year that are now history.
The tax savings are estimates, but even as estimates they demonstrate the richer are getting the big slice of pie in these tax cuts, while the $50,000 earner is getting peanuts.
Reagonomics again?
In sharp contrast, the legislature threw what amounts to a month of gasoline money, a third of a month’s rent or mortgage, or two weeks of groceries to the lower classes with adjusted gross income of $40,000 to $150,000.
Albany in its never-to-be-forgotten “never-never land” thinking cut the tax rate for the working class a mere point-four of a per cent from 6.85% to 6.45%.
Point-four of a per cent from 6.85% to 6.45%
The $100,000 a year adjusted gross income earner under the new tax rate of 6.45% enacted last week pays $6,450 in state income tax for 2011-12, that’s $400 lower than they pay under the old rate of 6.85% ($6,850). That’s the equivalent of gas for two cars for four weeks. Maybe a third of your mortgage for one month. A week of groceries.
The lower class should be sending telegrams of thank you’s to Albany don’t you think?
They must be so happy for a little crust from the state’s income pie.
The person making $50,000, starting salaries for some starting union jobs—receives $200 in tax savings from what they would have paid ($3,425 compared to their new state tax of $3,225).
That will not even pay your commutation ticket to Manhattan on the MTA.
The person or couple making $150,000 adjusted gross income will be receiving a windfall from their benefactors in Albany of $600 ($9,675 in state taxes due, instead of $10,275 ) That’s a Broadway show and dinner, and two weeks of gasoline for the two-SUV family.
Once you get past $150,000, your new state tax rate goes up slightly to 6.65% (still lower than the 6.85% you would have paid previously.
But in Albany’s way of looking at things, if the “struggling middle class” making beyond $350,000 does not get more relief, the state will be in worse shape. Really?
At a $400,000 gross adjusted income, paying the new state tax rate of 6.85% you will pay approximately $27,400 in state taxes this year instead of $31,400 under the old rate of 7.85%. Things are looking up! You pay $4,000 less taxes! Man, that’s a fast getaway weekend (in the Adirondacks or the Hamps).
Mmmmm, it is good to be the struggling middle class.
In Albany’s view, the more you make the more taxes you should get back. It gets better.
If you have $600,000 in adjusted gross income, you get $6,000 in state tax saving
At $1,000,000 in adjusted gross income, it looks like a very nice chunk of change:$23,320 in tax savings. Just enough to buy Muffie or Malcom a car on graduation from private school.
Ahh, you can just feel that New York economy starting to hum already can’t you. Happy days are here again.
Would you like to know what the couple making $1,999,999 in adjusted gross income will save under this very livable 6.85% tax rate: around $40,000 less taxes.
A total of $137,000 in state taxes as compared with $179,000 under the old millionaire’s tax.
Now what is wrong with that number?
A fair legislator might think that you would like to give earners at say the $40,000 to $50,000 level a real make-a-difference cut.
A 4.65% tax rate that would save them $900 in taxes. Maybe, shudder, a 3.65% tax rate that would cut their taxes $1,800. That is a take-home pay game-changer for the Lower Classes—an extra $150 a month in spending money or money they could like save, spend on food, entertainment, rent.
This could have been been achieved by still giving a substantially less tax cut to the $150,000 and up earners.
How about a tax cut of 7.25% for the swells – more than a half percent less than the 7.85%-9% they would have paid under the old rate.
That 7.25% cut would give the $350,000 earner a $2,100 tax cut – instead of a $3,500 tax cut. Would those long-suffering “middle classers” miss the $1,400?
Take $700,000 adjusted gross income earner or couple: A 7.25% tax rate would still cut their state taxes $2,800 instead of approximately $7,000 more under the new 6.85% rate .( The 700,000 earner pays $47,950 in taxes at 7.25% instead of $50,750)
The million dollar earner would pay $4,000 more taxes ($72,500 at 7.25%, as opposed to $68,500 at 6.85%, the actual new rate).
The $1.999 Million Dollar adjusted gross incomer—(I know the living is tough)—well a 7.25% tax rate instead of the now-law, 6.85% — delivers an $29,000 tax cut instead of a $42,000 tax cut ( $13,000 differential).
Are you following what has happened here?
The strategy of the tax cut is to reward those who least deserve it.
The “struggling upper class” who just aren’t keeping enough of their millions and are threatening to leave the state, according to the Albanyists.
The only persons really benefiting from this tax are the people who really need tax relief the least.
Ostensibly the tax cuts on the rich will stimulate spending and help balance the state budget that is still $2 Billion short,(according to Assemblyman Robert Castelli) this year. There’s the cut in the MTA tax, too, which no one in Albany has said specifically where that’s going to be replaced. (Mr. Castelli, the 89th District Assemblyman says this will be achieved from savings to come.)
The argument was to not let all the income from the millionaire’s income tax disappear when it expired December 31.
However, WPCNR would argue that Albany has given back too much to those who have too much and given back not enough to those who have to struggle to keep what they have.
I hope you struggling middle classes up there will spend your thousands wisely.
What about those making over $2 Million well they get only a very modest tax cut,8.97% rate previously is cut to 8.82%.
That means if you make an adjusted gross income of $10 Million you will pay $15,000 less taxes this year than last, $897,000 to $882,000.
Buddy can you spare a grand?
