Take Back Our Economy: Closing a Tax Loophole on Big Business
July 22, 2008
On July 17, over one thousand union members gathered in Manhattan, joining more than a dozen coordinated events worldwide, for a “Take Back the Economy” protest calling attention to preferential tax treatments for corporations and the mishandling and questionable ethics related to the investment of employee pension funds by private equity firms. The rally was organized by SEIU 1199, SEIU 32B-J, and the Working Families Party.
Over the last 30 years, our state’s tax code has been more and more tilted against middle-class New Yorkers and in favor of big corporations and the very wealthy. While the well-off exploit tax loopholes and benefit from low rates, working New Yorkers are forced to pay more through rising property taxes, sales taxes and user fees that many don’t consider taxes (but should), such as rising subway and bus fares.
With the economic problems our country is facing, tax cuts for the rich and for certain big businesses leave us with ever-growing budget gaps - billions of dollars’ worth - in necessary areas like school funding, health, and public transportation infrastructure.
Something has to give.
One of the ways that I am working to address this is through a bill that I introduced last month with the support of the Working Families Party. My bill would close a tax loophole that allows managers in private equity and hedge funds to avoid paying millions of dollars in taxes resulting from “carried interest.” The loophole unfairly allows these major financial engines to avoid taxes that small businesses have to pay under the Unincorporated Business tax laws of New York.
The Fiscal Policy Institute issued a report on April 15th that found that closing this loophole would generate between $165-225 million every year in revenue for New York City. The Executive Director of the Working Families Party, Dan Cantor, wrote an excellent piece for the Gotham Gazette that explains how the tax loophole works and how it is costing City taxpayers money (“Where The City Can Find $200 Million”). It is wrong that these multi-million dollar companies continue to get away with avoiding paying the same taxes as small businesses, especially when middle-class New Yorkers are struggling in a bad economy.
Another MTA Fare Hike: It Doesn’t Have to be Déjà Vu (all over again)
July 22, 2008
Just last year, I stood on the steps of City Hall with Gene Russianoff of NYPIRG’s Straphangers Campaign to protest an MTA fare hike. Now it’s happening all over again.
It came as no surprise to me when a MTA official leaked to the New York Times that once again the MTA is facing widening budget deficits. New York State has all but abandoned its fiscal responsibility to the MTA for the last decade and a half, leaving the Transit Authority’s fiscal health up to the volatility of real estate taxes, while forcing the MTA to balance shortfalls on the backs of middle and low-income straphangers through repeated fare hikes. The MTA is once again looking at another fare and toll hike, which would be only the second time in the 100 year history of the subway that fares are raised in back-to-back years.
While the MTA’s budget deficits look grim, and a fare hike seems unavoidable, it is only because New York State refuses to unshackle itself from one of the most regressive income tax structures in the country. What most New Yorkers don’t even realize is that if they make $45,000 a year they are in the same income tax bracket as New York’s elite millionaires and billionaires.
Last March the Assembly Democratic Caucus announced a plan to raise $1.5 billion in revenue for transportation through a less than 1% income tax surcharge on those New Yorkers earning over a million dollars. While Governor Paterson and the State Senate did not embrace this plan at the time, I believe the current state of the MTA’s finances demand that the Governor take a second look. If Governor Paterson has the foresight to call the legislature back to Albany to pass some form of the millionaire’s tax he would break the cycle of balancing the MTA’s budget on the backs of straphangers who can least afford to pay.
But an income tax surcharge on those earning over a million dollars is only a short term solution. If Governor Paterson has the vision and the fortitude he should champion a more progressive income tax structure as the centerpiece of his 2009 legislative agenda, such as the Working Families Party has put forward, we should go far beyond just plugging the MTA’s budget gaps and instead reinvigorate our State’s fiscal health, while giving millions of middle- and low- income New Yorkers tremendous tax savings.
