A Fairer Tax System to Combat Poverty and Inequality
David R. Jones, La Nueva Mayoria / The New Majority
“It's going to be an austere year.” That’s how we’re often greeted every year in Albany when we arrive with our demands for a more just and equitable state in which New Yorkers can have access to an affordable health, housing and education system. I'm afraid this year will be no exception.
The latest report from the New York State Division of the Budget speaks of a deficit of up to $4 billion dollars, which many will use as an excuse for their inaction, but which in reality is a lack of vision and courage to end the status quo. If there are no funds to combat poverty, it is time to put into action one of the many proposals that exist to increase state income through a fairer tax system where the rich finally pay their fair share that can be used to finance public policies that benefit the most disadvantaged.
I do not deny that the state may have a real deficit in its budget. But the solution cannot be to simply avoid or cut public spending when the needs are so pressing. The truth is that the main reason we are in this problem is because for a long time the wealthiest residents and corporations have not contributed enough to the state coffers.
There are several mechanisms that the state could use to generate more income. From simple options such as raising the personal tax rate for millionaires and eliminating tax exemptions on capital gains and inheritances, to more complex ones such as law A3353/S1406 that would force the state to collect the profits generated by taxes to stock transfers, which are currently not fully collected and represent losses of up to $14 billion dollars a year.
The inequality in our tax system is also reflected in a variety of instruments that corporations take advantage of to access tax incentives that leave little profit for the state. An example of this is 421a, a gigantic tax incentive for builders that denies New York City nearly $2 billion a year in tax revenue. 421a was allowed to expire in 2022, but the real estate industry is fighting to have it reinstated as soon as possible. Another example of tax incentives with detrimental consequences is the 485-a tax abatement, which was initially designed to incentivize mixed-use redevelopment of commercial and industrial spaces, but has become a lucrative tax break for expensive housing, primarily targeting students. The city of Buffalo, the largest user of 485-a, gave up more than $81 million in tax revenue in 2021.
Some sectors warn us of the negative consequences that raising taxes on the wealthy can bring. Mainly that many more would flee to other states where taxes are lower, leaving us in an even deeper tax hole. But the reality is different. According to a recent study by the Tax Policy Institute , the number of billionaires in New York continues to grow, despite recent tax increases, and it is low- and middle-income people, especially Blacks and Hispanics, who have had to emigrate to other states where the cost of living is lower.
In short, it is time for the state to examine all revenue generators and not use this crisis as a convenient excuse for extreme austerity. Raising taxes on the ultra-wealthy is controversial, but now is the time for state lawmakers in both chambers to stand up and show leadership at this critical time when the most disadvantaged communities are suffering.
David R. Jones, Esq., is President and CEO of the Community Service Society (CSS), the leading voice on behalf of low-income New Yorkers for more than 175 years. The views in this column are solely those of the writer. The New Majority is available on CSS’s Web site: www.cssny.org.