Weld Proposes Eliminating Personal State Income Tax

ALBANY – Seeking to shake up the race for governor, Republican candidate William Weld yesterday proposed eliminating the personal state income tax for New Yorkers who make up to $75,000.Mr. Weld’s plan would slash taxes by thousands of dollars for millions of New Yorkers and would provide no benefits to taxpayers with incomes above $75,000. Thus, a single person earning $75,000 wouldn’t pay any state income tax, but a single person earning $75,001, and taking the standard deduction, would pay the top rate of 6.85% and have a tax liability of $4,226.82.His proposal would also help single New Yorkers much more than married couples, whose combined income would have to be $75,000 or less to be eligible for the elimination.Mr. Weld, who is close to clinching the Republican nomination but trails Democratic candidate Eliot Spitzer in the polls by 40 percentage points, unveiled his plan at an annual gathering of small business groups at the Capitol. The immediate reaction to his proposal was decidedly mixed.Governor Pataki, speaking to reporters, said the tax elimination “would be a positive thing for our state’s economy,” but added that it would have to be considered “in the context of a total financial plan.”Liberal and conservative fiscal analysts criticized the plan as poorly conceived, saying it would create a massive marriage penalty and bump in tax liability.“They don’t know what they’re doing,” said the executive director of the Fiscal Policy Institute, Frank Mauro. “It’s a seat of their pants thing without it being thorough, without any professionalism.”E.J. McMahon, director of the Empire Center for New York State Policy, an arm of the conservative Manhattan Institute, said Mr. Weld’s plan has a “heck of a notch and a heck of a marriage penalty. I’d say that’s poorly designed.”The largest tax cut proposed by any candidate in the governor’s race, Mr. Weld’s plan would cost slightly under $7 billion, according to an estimate put out by his campaign. As the rate stands now, a person in New York earning $70,000 a year and claiming the standard deduction pays $3,884 in state income tax a year.Mr. Weld said the state would pay for $5.3 billion of the tax elimination by reducing Medicaid spending in New York to a rate of twice the national average. “If it’s good economic policy, then you set about figuring out how it’s going to fit within the four corners of a budget,” he said.Mr. Mauro, who runs a liberal research group, predicted the tax cut would ultimately force local governments to raise property taxes, because in order to pay for it, the state government would likely have to reduce its spending on education. Local governments would then have to pick up the costs by raising taxes, he said.Mr. McMahon said supply-side tax cuts would spark greater economic activity in the state. “For that kind of money,” he said, “you can get more bang for the buck with either a marginal rate cut or by eliminating taxes on investment income.”Aimed squarely at young and middle-class New Yorkers, whom Mr. Weld said are fleeing the state for opportunities elsewhere, the plan, political observers said, is an attempt to reinforce his credentials as a tax-cutter while appealing to voters whose economic background differs from that of Mr. Weld, the Harvard-educated scion of a wealthy Long Island family.It also contrasts with the supply-side tax cutting proposals put forward by the commission that Mr. Pataki appointed last year to overhaul the state’s tax code. Led by CNBC television host and economist Lawrence Kudlow, the commission recommended such cuts as lowering the top personal income tax rate to 5% from 6.85%, reducing the number of tax brackets, and eliminating taxes on capital gains and dividend income. Mr. Pataki, in his executive budget, proposed more modest cuts.One of Mr. Weld’s Republican opponents, John Faso, a former minority leader in the Assembly, responded cautiously to the proposal, saying, “When you cut taxes…it has to be in the context of a balanced budget.”The tentative support given to Mr. Weld’s plan by Mr. Pataki came as the governor defended himself from a suggestion made by Mr. Faso that he is partly to blame for a annual increases in the state budget exceeding the rate of inflation.Mr. Faso, responding to a question about the size of the budget from a reporter, said, “I think the Legislature and the governor, but primarily the Legislature, is addicted to spending.”Told about Mr. Faso’s comments, Mr. Pataki said, “He’s completely wrong. I have fought very hard over the course of my 11 years to control spending.”Later, Mr. Faso seemed to withdraw his criticism, saying the governor has sought to curb spending but was prevented from doing so by lawmakers.

Weld Proposes Eliminating Personal State Income Tax

Weld Proposes Eliminating Personal State Income Tax

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