It’s Time For A Wealth Tax

Issue 262

We Need Security and Equity for All in the Era of COVID-19 and Beyond.

Marcela Mitaynes Mar 15, 2021

Also see “From Brooklyn to Buffalo, Socialists Are Organizing to Tax the Rich” by Rob M. Katz.

With a projected budget deficit of more than $39 billion over the next four years, New York State is in the largest fiscal hole on record. To dig us out, Governor Cuomo plans to cut social services while hoping for a federal bailout. Cutting the budgets of hospitals, transit, and our public schools, in the middle of a global pandemic that has left millions of working-class New Yorkers unemployed, uninsured, and food insecure is cruel and unjust. The effective solution is necessarily equitable – we must increase taxes on the wealthy by amending the New York State Constitution to allow a wealth tax. I have introduced a bill to do so, alongside my colleague Jabari Brisport.

At the root of the inequality in our state is a regressive system where working people pay more of their income in taxes than the wealthy.

The pandemic, after all, hasn’t affected all New Yorkers equally. Over the past year, New York’s billionaires have increased their wealth by $77 billion. In that same time, 2.4 million New Yorkers have filed for unemployment insurance, with more than one million still out of work. In the era of COVID-19, the rich have gotten richer while the rest of us struggle more than ever. We should balance the budget by taxing those who have profited in the midst of crisis, not by cutting services which the rest of us and our state economy depend on. Amending the state constitution to remove the prohibition of taxes on intangible assets is an essential step towards rectifying a fundamentally unjust tax system. Such an amendment would pave the way for New York to pass a Bernie Sanders or Elizabeth Warren style Wealth Tax and allow New York to fully address the gross inequality in our state.

At the root of the inequality in our state is a regressive system where working people pay more of their income in taxes than the wealthy, as opposed to progressive one where those who are able to contribute more do so. Under our existing system, income tax rates in New York state are marginally progressive, ranging between 4-8.82%, with the largest tax burden falling in the middle of the income range. However income taxes are only one part of the picture, property, sales, and excise taxes, which disproportionately affect low-to-middle income households, add up to a tax structure that places the highest burden on those at the bottom on the income ladder.

Property taxes are one particularly regressive part of this equation because of how different income groups store their wealth. Lower and middle income households store between 75-80% of their wealth in their homes, which are subject to property taxes, but for higher income groups the picture is very different. High income households, beginning in the $200,000-$500,000 range, hold most of their wealth in intangible assets like stocks and bonds, which the New York State Constitution currently prohibits from being taxed. This constitutional provision is now almost a century-old, having been enacted in 1938 to establish the “financial supremacy” of New York City and protect asset holders from the risk of having their investments taxed. Now that New York State faces the worst fiscal crisis in its history, this presents a novel opportunity to fully fund our budget, make financing available for COVID-19 relief, while correcting our rigged tax system, fighting the dominance of the financial industry in our politics, economics and the impact of boom and bust cycles on the lives of the working class.

A wealth tax would strike at the heart of New York’s gross inequality that ravaged our state even before COVID-19 struck. While other proposals in the Invest In Our New York Act would deal mostly with undoing the massive tax breaks for the rich in our tax code, only a wealth tax can fight already runaway inequality. Even if we end tax breaks for the super wealthy in New York, the rich will collectively still have billions in non taxable assets. They will use these billions to buy influence in Albany, in Washington D.C. and continue to oppose our movement to fund a just future for the working class. A wealth tax would allow New York to reclaim those billions through an inescapable mechanism that could raise billions for our state. Through a wealth tax, we can truly rebalance the scales in our state.

Over the course of the ongoing pandemic, the rich have grown tens of billions of dollars richer while our state is tens of billions of dollars poorer. 

Governor Cuomo has yet to show that he has the courage to do what is necessary to build a prosperous state—and an equitable one. His preference, it seems, is to coddle billionaires while burdening working people with cuts to the services they need to survive and thrive. The systematic underinvestment in public health of the last 10+ years has directly led us to havoc wrought by the Coronavirus. If we seize this moment, however, we can fully fund our budget, fund a real social safety net while creating a tax environment that supports equitable long-term economic development – a new development philosophy that starts by acknowledging the dignity and potential of every single human being

Over the course of the ongoing pandemic, the rich have grown tens of billions of dollars richer while our state is tens of billions of dollars poorer. In a time when more than a million New Yorkers face eviction, 60% have lost income, and food insecurity is affecting nearly two million residents, taxing the rich is the only just and rational course of action. Governor Cuomo’s modus operandi continues to be protecting his wealthy donors, at the expense of the rest of us. That cost is paid for with our dignity, our sanity, and all too often our lives. Amending our state constitution to allow a wealth tax is a crucial element of the just and equitable tax system we so desperately need to save the future of our state.

Marcela Mitaynes is a democratic socialist who represents Assembly District 51 which encompasses Sunset Park, Red Hook and Bay Ridge. For more about Assemblymember Mitaynes, see her June 2020 interview with the Indypendent: Displaced Tenant Wants to Move Into State Capitol.

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