Tue February 25, 2014
Cuomo proposes to cut estate tax
Governor Cuomo’s plan to cut the estate tax is drawing praise from fiscally conservative groups, and condemnation from advocates for the poor.
Cuomo’s proposal would raise the threshold for New York’s estate tax from the current $1 million to $5.25 million, which is the current federal rate of taxation.
EJ McMahon, with the fiscally conservative think tank The Empire Center calls the levy the “death tax”. He says it’s about time New York got in synch with the rest of the country, where many states have already eliminated the tax altogether.
“Our death tax is an outlier,” McMahon said.
“Why would you want to do something that gives anybody any added incentive to not be in New York?”
McMahon says while the ultra wealthy can pack up and move to another state to avoid the estate tax, it’s the middle class who can’t. And he says holding one million dollars in assets that are subject to the current estate tax is not that uncommon. According to figures cited in a report by the Empire Center, six percent of New Yorkers can be defined as millionaires, when the worth of their home and investments is added together.
McMahon says even New York City Mayor Bill deBlasio is in that category, whose home’s value has increased to over $1 million, according to tax records.
McMahon says many of those millionaires are family farmers or small businesses.
Opponents of the proposal to cut the estate tax have said it unfairly benefits the wealthiest New Yorkers. Mike Durant, with the National Federation of Independent Businesses, says those accusations aren’t accurate.
“We’re very disappointed that the rhetoric on this has taken the form of the one percent, 99 percent, class warfare,” Durant said.
Ron Deutsch, with New Yorkers for Fiscal Fairness, a progressive leaning group associated with the labor unions, says the report is misleading.
He says while some in the middle class could be helped, richer people would benefit even more greatly from the changes that Cuomo is proposing.
“The lion’s share of that tax cut is going to go to the richest 150 to 200 estates in New York right now,” Deutsch said.
Deutsch says the heirs to someone with a $10 million estate could see a 50 percent reduction in the estate taxes they would pay, if New York raises the threshold for taxation to the $5.25 million now in federal law.
And he says another proposal from the governor, to lower the overall estate tax from 16 percent to 10 percent, would greatly benefit those with the largest estates.
Deutsch says New York would be better off using its budget funds to provide for New Yorkers who are struggling the hardest financially, rather than helping what amounts to a small amount of the state’s population.
“Let’s do the math,” Deutsch said “Six percent of New Yorkers could be impacted by the estate tax, 50 percent of the kids in our upstate cites are living in poverty.”
The legislature has just over a month to agree on a budget plan with Governor Cuomo. Republicans in the State Senate are supporters of the estate tax cut, and would like to immediately adopt the higher federal threshold Assembly Democrats have not specifically rejected the proposal, but have advocated for more spending on things like education, before cutting taxes.