A democrat-led tax scheme wants NY billionaires with $1 billion or more in assets to pay more as a solution to prevent budget cuts.
Pressured by the economic damages brought upon by the coronavirus, New York democratic leaders—along with Rep. Alexandria Ocasio-Cortez—proposed a new tax plan which aims to tax uber-wealthy people more.
The campaign was raised following unprecedented budget cuts and low state revenue due to the health crisis.
NY to earn $5.5 billion a year under new tax scheme
With New York weathering a $13 billion deficit, the state’s lawmakers want to implement a new capital gains tax plan to raise revenue amid the pandemic. Under the new “Make Billionaires Pay” proposal, capital gains tax rates for uber-rich New Yorkers with assets amounting to $1 billion and more will increase.
If approved, it will earn New York an estimated $5.5 billion a year.
“It is time to stop protecting billionaires, and it is time to start working for working families,” said Rep. Alexandria Ocasio-Cortez.
The initiative is said to form a new mark-to-market on capital gains, which would impose a tax on any increases in value for a particular asset during a calendar year. The city currently taxes assets only when they sell. But with the new policy, wealthy people are required to pay capital gains tax whether an asset is sold or not.
Tax advisors, however, warned that billionaires could easily play the proposed tax system. A tax and business services expert at Marcum, for instance, said that mark-to-market tax opens a “big dilemma.”
“A big problem with a mark-to-market tax is valuation. You could just get a valuation that is helpful to you,” said Joseph Perry of Marcum, as quoted by CNBC.
Cuomo vs. “make billionaires pay” tax plan
Amid the calls to tax billionaires, Governor Cuomo appears to be hesitant with the said campaign. He said that that the new policy might only prompt uber-rich New Yorkers to move to other states with lower tax rates.
Cuomo also insisted on federal tax hike as a solution rather than the proposed tax scheme, citing billionaires will only move to lower-tax states.
“Let them apply it all across the country. […] Because if you take people who are highly mobile, and you tax them, well, then they will just move next door where the tax treatment is simpler,” the governor explained.
But reports of Cuomo receiving donations from several billionaires had raised the possibility of him defending billionaires as he receives help from them. As per Too Much Information, a campaign finance data, Cuomo accepted money from more than a third of NY billionaires to support his political group.
On Wednesday, July 29, the governor had again warned that if the state would place more tax on wealthy people, then “you would have no billionaires left.”
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