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It’s been over a year since the COVID-19 state of emergency began – and a year later we are still a state of emergency.
Take a minute to realize how bad things have got over the past eleven months. Almost 50,000 New Yorkers lost their lives to this horrific virus and nearly 1.6 million were infected. More than a million New Yorkers have lost their jobs, and 60 percent of all New Yorkers have reported loss of income. In the midst of this public health emergency, more than a million New Yorkers have lost their health insurance. Meanwhile, critical funding for public schools and other services has been withheld due to a loss of government revenue and the Trump administration’s refusal to provide necessary federal assistance.
A year of pain was enough. New York is now at a crossroads: will we cut programs that are preventing our neighbors from starving or will we ask big corporations and the ultra-rich to pay their fair share of taxes? The decision we are making in this year’s budget could have implications that will last for the next decade.
If we are serious about rebuilding our economies, we should pass the Invest In Our New York Act, a package of revenue bills that would include a complete repeal of the Trump administration’s corporate tax cuts in New York. Given that our state has a huge deficit of $ 60 billion over the next four years, this legislation is more important than ever.
The Trump tax cuts were a disaster: they included massive giveaways for large corporations (one CEO even called them “a mighty Christmas present”) and failed to achieve the intended goal of stimulating the economy. Trump’s tax cuts dramatically lowered the corporate tax rate from 35 percent to 21 percent – the most generous corporate giveaway in more than three decades. While Trump claimed these corporate tax giveaways were “rocket fuel” for our country’s economy, it was immediately clear that it was a failure. Just a year after the bill was passed, economic growth had slowed to 2.9 percent – exactly the same rate our country saw two years before the Trump tax cuts.
While the Trump tax cuts were always a bad idea, the COVID-19 pandemic has made its shortcomings even more apparent. New York state is now facing a fiscal crisis unlike anything we have seen in decades, and Trump’s corporate giveaways are making matters worse.
For this reason, Senator Hoylman, co-author of this statement, supports legislation in the Invest In Our New York Act to reclaim the Trump corporate tax cut in New York by imposing a state surcharge on large corporations that would bring New York to a tax rate in line with neighboring states like New Jersey and Pennsylvania. Most small businesses are not affected, and small businesses with very low profits are not affected. Economists estimate that this legislation would generate $ 9 billion in government revenue each year: that’s $ 9 billion that New York State could use to fund essential services like homeless shelters, schools, libraries, and other social services.
Generating new, year-over-year progressive revenue at the state level is the financially sound approach to budgeting in the wake of COVID-19. While the COVID-19 emergency aid will likely come from the federal government, it won’t be enough to address our main problems. The financial crisis of 2008 shows the importance of budgetary decisions made at the state level: Economists found that states that cut spending delayed their economic recovery by up to five years. Data shows that increasing taxes on the wealthy few will increase GDP and stimulate the economy.
Even before the pandemic, it was clear that New York State would have to take bold measures to help the less fortunate. A 2018 study – years before New York saw a single case of the novel coronavirus – found that New York’s Gini coefficient (an economic metric used to track income inequality) was higher than that of any other state. The pandemic has exposed these structural inequalities and given us the clear moral reason to address them directly.
As always, we hear the same weary arguments from opponents of progressive taxation who claim it is too brave or too ambitious. Wannabe municipal cassandras claim progressive taxes could lead New Yorkers to leave the Big Apple in low-tax countries like Florida or Texas. However, the facts do not support this claim: Three-tenths of a percent of American millionaires have moved to avoid taxes. The decline of New York City has been greatly exaggerated.
The same fiscal approach that made us the most unequal state in the country will continue to fail. New York State has made it a habit for too many years to cut taxes on the ultra-rich and corporations while investing in our social safety net and public services. As the state government paid less and less, counties and municipalities were forced to cut their services while trying to cover what they can through local real estate, sales, and other taxes that weighed heavily on working families and the poor . We need a new approach
But there is a better way. By reclaiming the Trump Corporate Tax Cuts, we can fund a historic and just future for our communities. New York State has an opportunity to lead the country in building an economy where all can thrive. It’s time to pass the Invest In Our New York Act.
Brad Hoylman, D-Manhattan, is a New York State Senator. Ricky Silver is a co-organizer of Empire State Indivisible.