Two state lawmakers have introduced a bill to tax capital gains in New York as the effort to increase taxes on the state's wealthiest residents takes another step forward.
The bill backed by Sen. Gustavo Rivera and Assemblyman Ron Kim taxing investment income would raise $7 billion in revenue for the cash-strapped state, according to lawmakers' estimates.
New York is facing a budget gap made wider by the COVID-19 pandemic and subsequent economic recession.
The measure is meant to counteract federal tax policy that taxes capital gains at lower rare than ordinary income. And it comes as legislators and Gov. Andrew Cuomo are starting up a budget season in which the marquee debate will likely be over raising taxes on wealthy New Yorkers to help fund education, health care and social services in addition to balancing the budget.
“Billionaires and millionaires in our State have become wealthier during this pandemic while working-class New Yorkers are struggling to make ends meet," Rivera said. “Creating new revenue streams by increasing taxes on the most affluent among us will ensure our communities receive the relief they deserve for the sacrifices they have made during this difficult time."
The governor's budget proposal would raise tax rates on those who earn $5 million and above. The proposal is based on the state receiving $3 billion for the coming fiscal year in federal stimulus funds.
But progressive advocates and lawmakers are pushing for more. The capital gains tax is part of a larger campaign launched by progressives to move forward with tax plans aimed at wealthy people and upper-income earners. All told, a half-dozen bills are being planned to generate $50 billion in revenue.
“It’s very simple — there is no taxing the rich if we don’t tax long-term investment and capital gains,” Kim said.
“Close to 90% of investment income comes from the top 10%, who have managed to avoid paying taxes on their gains or are taxed at a considerably lower rate than labor income. State and federal regulators have claimed that they could not track and properly analyze capital assets, but that is no longer the case. We have the tools and technologies to get this done.”