On Wednesday, both houses of the legislature are due to release their one-house budget proposals, which they will then use to negotiate a final spending plan with Governor Cuomo. Assembly Speaker Sheldon Silver says Assembly Democrats are not yet on board with part of Cuomo’s plan to cut the estate tax.
Silver says the members of his Democratic conference are likely to endorse one proposal in Governor Cuomo’s plan to cut the estate tax. It would raise threshold for imposing the estate tax from $1 million in assets and property to $5.25 million. Silver says the tax break would affect many who are considered middle class.
“It impacts small businesses and family farms,” said Silver, who says some heirs are forced to sell their farms or businesses to just to pay the estate taxes, something he says is not “appropriate”.
Silver says he expects the Assembly’s one-house budget resolution to include the provision to raise the threshold for the estate tax to the $5.25 million.
But the Speaker stops short of backing the Governor’s proposal to lower the maximum taxation rate for estates from 16% to 10%.
“We’re still talking to the conference on that issue,” Silver said.
Progressive groups and labor unions have argued against lowering the top rate on the estate tax, saying it’s a giveaway to the very wealthy.
“I don’t see how we can possibly justify providing tax cuts to the richest people in our society,” said Ron Deutsch with New Yorkers for Fiscal Fairness. Deutsch says family farms or small businesses should be given exemptions instead.
Deutsch says it is an “encouraging sign” that the Assembly might leave the top taxation rate on estates at 16%. He says lowering it to 10% would represent a significant loss of revenue to the state, as much as three quarters of a billion dollars per year.
“We would lose too much revenue that otherwise could go to help fund our schools or feed hungry children,” Deutsch said.
Others argue that New York has to lower the estate tax, because almost every other state has already done so. Betsy Lynam, with Citizens Budget Commission, a non-partisan budget watchdog group, says New York’s relatively high estate taxation rate harms it’s competitiveness and lowering the rate could encourage some wealthy people to remain in the state.
“If the landscape is flat, and you stick out like a sore thumb, it’s not going to help us retain people, that’s for sure,” Lynam said.
She says many are avoiding the state tax anyway by employing “savvy” legal strategies to get around it.
The governor’s estate tax cuts are likely to be supported in the State Senate, where Republicans who control the chamber in a power sharing agreement, have been long time backers of the measure.