For decades, New Yorkers have paid the highest combined state and local taxes in the nation.
And thanks to Democratic control of the state’s executive and legislative branches, their tax burden will be more onerous.
The most egregious new tax is “congestion pricing,” whose aim is not to relieve traffic, as Cuomo claims, but to raise tax revenue.
The MTA hopes to reap a billion dollars annually from the congestion tax and under the current low interest rate environment, that revenue stream could be leveraged to borrow up to $15 billion for capital projects.
But to borrow that much, annual tax collections must be recurring to meet principal and interest payments on bonded debt for up to 30 years.
Consequently, the MTA must hope that traffic does not decrease. In other words, the assertion congestion will diminish is a ruse to pick the pockets of many struggling taxpayers. As GOP Sen. Andrew Lanza has said, “congestion pricing” is simply “a target tax on people who have nothing but the gall to travel within their own city.”
To obtain legislative approval, Cuomo disclosed few specifics, promised exemptions, and agreed that the tax would not be imposed until after the 2020 elections.
Naive freshman Democratic legislators from Long Island and Westchester were bought off with the pledge that their suburban rail systems would receive $2 billion from the projected $15 billion borrowing.
The governor gave them “sleeves off his vest.” That’s because the LIRR and Metro North will be getting that much and more from the existing MTA capital projects plan.
In return, the Legislature handed over absolute taxing power to a “traffic mobility review” board that will be controlled by Cuomo.
To quell recent complaints, it appears the governor and the MTA are making up responses as they go along.
For instance, an MTA spokesman recently said Manhattanites living in the congestion pricing zone earning less than $60,000 will be able to apply for credit on their state income tax returns for any paid congestion taxes.
Huh?
Working-class folks living in the pricing zone south of 60th Street probably live paycheck to paycheck and can’t afford to wait a year for a tax credit.
Meanwhile, Cuomo dismissed complaints about the impact of the congestion tax on working class folks, claiming most drivers won’t be affected because “only very rich people can drive into Manhattan.”
Huh?
Reacting, Queens Assemblyman David Weprin appropriately reminded the governor, “A lot of people, they have no choice but to drive.”
MTA bureaucrats have two years to design and implement tax collecting technology chock full of exemptions and loopholes.
Good luck with that one.
As for the other new Cuomo taxes:
Paper Bag Tax: Shoppers will have to pay a 5-cent tax on each bag used to pack their purchases.
Online Shopping Tax: Buyers of products from out-of-state vendors will now have to pay New York sales taxes on those purchases. Cuomo expects those taxes to cost consumers $540 million annually.
Millionaires Income Tax: This “temporary” tax that Cuomo pledged to eliminate in 2010 has been renewed for another five years.
Real Estate Transfer Tax: The 1 percent “Mansion Tax” will increase. “The new law increases this tax on a sliding scale for transfers where the consideration is in excess of $2 million, up to the highest rate of 3.9 percent on transfers with consideration in excess of $25 million.”
Interestingly, Cuomo dropped his annual “pied-à-terre” property tax on homes worth $5 million or more in favor of the transfer tax.
Why?
First, real estate moguls complained that the tax would cause a drop in property values.
Second, city officials realized that declining values mean less tax revenues in their coffers.
These two powerful forces killed the governor’s proposal.
However, replacing the transfer tax for the “pied-à-terre” tax creates a problem.
The recurring pied-à-terre property tax, which city Comptroller Scott Stringer projected would have raised $650 million annually, might have been leveraged to borrow as much as $6 billion for the MTA.
Revenues from the property transfer tax, however, are considered unpredictable “one-shots” — not “recurring” ones. Hence, it is often difficult, if not impossible, to leverage transfer taxes for borrowing purposes.
Taxpayers should be pleased to know that the additional taxes they pay will be sufficient to fund big salary increases for the governor and members of the Legislature.
Cuomo’s salary will increase from $179,000 a year to $220,000 in 2019, to $225,000 in 2020 and to $250,000 in 2021.
All in all, Cuomo’s taxing spree helps explain why a recent poll indicated that 40 percent of NYC residents say “they can’t afford to live anywhere in the state — much less the Big Apple.”
