New York's business leaders may back new mayor on taxes
NEW YORK (Reuters) - New York's business leaders may be open to a plan to levy a surcharge on higher earners in what could be a boost to mayor-elect Bill de Blasio when he lobbies the state legislature to approve the measure in next year's budget.
Backing from New York's business elite will be important to get the needed votes in Albany, the state capital, where the legislature is divided between Democrats and Republicans. De Blasio is likely to get a more favorable reception if he can show broad support from the city's various interest groups.
De Blasio's plan to increase city taxes from 3.9 percent to 4.4 percent on those making over $500,000, in order to raise $530 million to expand pre school programs, has already attracted support from some high-level Albany Democrats, who are conscious of his landslide victory where he captured over 70 percent of the vote.
Senate co-leader Jeffrey Klein and Assembly leader Sheldon Silver have both been quoted as backing the plan. Even so, getting Albany to agree to a tax increase will not be a easy. State Governor Andrew Cuomo, who has committed to keeping taxes in check, would also have to sign off on the idea.
Steven Witkoff, chairman of The Witkoff Group, a real estate developer that owns landmark New York buildings like the Woolworth tower, believes the plan is one New York's business leaders could be persuaded to embrace.
"If you listen to the way he asks for it, it's completely responsible. He says I'd like people who have done really well out there to help and pay their fair share for those who need more help," said Witkoff, citing his Bronx upbringing and New York public school education.
"If I had a surcharge and it cost me $1,500 to $2,000 a year in tax for there to be this program for early start, I think that's a home run," he said. "If you live in this town, how do you not want to pay more tax for early education prospects for New York City kids?"
A MODEST PROPOSAL
Backing for higher taxes would have to be part of a wider conversation about public safety, regulation, enforcement and business incentives, said Kathryn Wylde, president and chief executive of The Partnership for New York City, which represents 200 companies that employ around 775,000 New Yorkers.
"It's possible, yes," said Wylde when asked if the group might support De Blasio as he takes his case for the tax levy to Albany. But she added: "We would certainly oppose the tax increase in the absence of a larger commitment to how the city is going to maintain its competitive environment."
The group says its member firms contribute $143 billion to New York City's annual output, nearly a quarter.
Wylde made her comments at the end of a fiercely fought mayoral campaign. De Blasio's vow to levy the surcharge as well as cut tax breaks to corporations drew criticism that he would scare off investment and drive jobs out of the city.
An analysis by the New York's publicly-funded Independent Budget Office shows that earners making an annual $750,000 to $1 million per year would pay an extra $1,335 to $2,670 under the new surcharge. About 51,300 of New York's 3.5 million taxpayers would have to pay the tax, the IBO said.
De Blasio first introduced the proposal at a meeting of the Association for a Better New York, another business group. The group's chairman Bill Rudin declined to comment.
Right-leaning think tanks like the Manhattan Policy Institute say New York is already one of the most heavily taxed cities in the United States and is facing increasing competition from other locations that are set to benefit if New York hikes taxes and cuts business incentives.
Other economists say there is scant evidence to suggest marginal tax increases will lead to an outflow of wealthy tax payers, jobs, and businesses.
"There is absolutely zero evidence that a tax increase of that magnitude will effect anybody's location decision," said James Parrott, chief economist of the Fiscal Policy Institute. "The proposal that De Blasio has, in the scheme of things, is pretty modest."
(Reporting by Edward Krudy; Editing by Nick Zieminski)