ALBANY — The budget proposal approved by Senate Democrats, while packed with revenue-generating taxes on the wealthy, doesn’t include a long-sought tax on high-end second homes or increased levies on billionaires.
Senate Dems shied away from the so-called pied-1/4 u00e0-terre tax even though it was included in the Assembly’s one-house fiscal plan as they presented a tax package that could pull in about $8.2 billion over the next year.
New York State Sen. Brad Hoylman (D-Manhattan) has championed the measure in recent years as a way to crack down on luxury abodes owned by jet-setters.
The senator, who’s running for Manhattan borough president, hasn’t even tweeted about the bill since December, although it is mentioned on his campaign website.
First proposed in 2014, the tax would apply to properties valued at more than $5 million and not the principal residence of the owner. Those apartments would be subject to a rate between 0.5% and 4% that would be applied on the market value above $5 million.
Additional taxes would also apply to condos or co-ops with an assessed value over $300,000. The proposed tax would not apply to homes that are rented out full time or occupied by a child or parent of the owner.
In January, the Independent Budget Office lowered its annual revenue estimate for the levy, saying it would generate $232 million annually, down from the $390 million previously predicted.
Real estate interests have long fought the bill, arguing it could have negative impacts on middle-class homeowners, while progressives made it one of the cornerstones of efforts to raise revenue from the rich.
Hoylman, who did not respond to requests for comment, touted several other measures that made their way into the budget blueprint in a press release, including a program modeled on his “Save Our Storefronts” proposal which will set aside $500 million in commercial rent relief for COVID-impacted small businesses.
Also absent from the budget bill is a proposed tax on billionaires that would target unrealized capital gains that increase in market value. Such a so-called “mark-to-market” tax would apply the state’s standard top income tax rate of 8.8% to any increase in value.
Rebecca Bailin, the campaign manager of the Invest In Our New York Coalition, which was seeking revenue-generating measures that could raise as much as $50 billion, said the current budget proposals don’t go far enough in taxing the wealthy.
“Without the necessary revenue, the legislature has stopped far short of preventing our public schools from reaching a fiscal cliff when federal aid runs out; ensuring that all New Yorkers have a safe and affordable home; preventing unnecessary overdose deaths; providing safety net equity for excluded workers, and so much more,” Bailin said.
Some watchdog groups disagree, arguing that the changes put forth by both the Senate and Assembly could cause problems for the cash-strapped state in the future.
“These tax increases are both unnecessary and economically risky,” said Andrew Rein, president of the Citizens Budget Commission, a watchdog group. “The Legislature’s tax proposals present more risk than those proposed by the Governor. They are larger, broader than just the personal income tax, and permanent.”
New York, which was facing fiscal problems even before the pandemic devastated the state, is also slated to receive about $12.6 billion in federal COVID relief funds.
Both the Senate and Assembly proposals not only increase taxes, but also raise spending over $200 billion for the first time, with most increases going to schools and health care.
“There’s a substantial level of overlap among, I’d say, the Senate and Assembly budget resolutions, including major investments in education and healthcare,” said New York Assembly Speaker Carl Heastie (D-Bronx).