ALBANY, N.Y. — After months of criticism from his progressive Democratic base and the Occupy Wall Street movement ridiculing him as "Gov. 1 Percent," New York Gov. Andrew Cuomo is taking a timely left turn with his allied Senate Republicans to increase taxes on the rich.
The deal announced Tuesday with legislative leaders, expected to be approved Wednesday in an afternoon special session of the Legislature, will increase the income tax on New Yorkers filing jointly who make $2 million and on single filers making $1 million.
The more than $2 billion tax hike will pay for a rare but modest middle class tax cut, fund jobs programs and upstate flood relief and ease the New York City transit tax on small business while giving manufacturers a tax break.
Cuomo sees the major legislative package as a tax reduction, where 4.4 million New Yorkers will pay the lowest tax rate since the Eisenhower administration, keeping nearly $1 billion that they can use to stimulate the sluggish economy.
That's a big part of the reason for the rare budget session in December, rather than the spring when there's more attention to the $135 billion fiscal plan. The "reduction" is based on the current high surcharge on New Yorkers making over $200,000. But that surcharge expires Dec. 31, so after that the deal announced Tuesday would be unavoidably seen as a politically dicey tax increase.
The agreement also marks a 180-degree turn for the popular governor, who has spent his first 11 months in office mostly going full-steam ahead.
"I am not going to go back and forth with the political wind," Cuomo said in October, almost a year after he won the office in part on a promise to "freeze" taxes. His platform was supported by Republicans, conservatives and Tea Party advocates in an overwhelming win. "You are kidding yourself if you think you can be one of the highest taxed states in the nation, have a reputation for being anti-business and have a rosy economic future."
But then came relentless pushing since January by powerful Assembly Speaker Sheldon Silver, progressive groups turning sharply critical, the Occupy Albany protesters he unsuccessfully tried to evict from outside the Capitol, and his own Democratic Party in their recent annual meeting. And polls showed they had three-quarters of New York voters on their side after three years of cuts to schools, hospitals and other services, even parks.
Cuomo, however, continued to argue he would do the right thing for New York, just as he had in legalizing gay marriage with just marginal public support, and like his father, Mario Cuomo, who held fast as governor against the death penalty despite popular support for capital punishment.
"Reporters would say, 'Well, people want it,'" Andrew Cuomo said in that news conference in October. "You can't just have as a governor a big poll-taking machine, right?"
"The governor moved more than anyone could have anticipated," said Billy Easton of the Alliance for Quality Education on Tuesday. AQE was one of the groups pushing to restore school aid and social service funding cut over the last three years of fiscal crisis.
"It's a credit to the community, labor, student and faith organizations and the courageous protesters at the Occupy movement," said Michael Kink, executive director of the labor and citizens' group Strong Economy for All Coalition.
"Occupy changed the zeitgeist. Andrew Cuomo changed the politics," said Richard Brodsky, a former assemblyman from Westchester who is now a senior fellow at the Wagner School at New York University. "This is a way to raise taxes on maybe one half of 1 percent of taxpayers that essentially allows a tax cut, adequate school aid, flood relief and new jobs.
The deal to be debated in closed-door conferences in the Senate and Assembly on Wednesday includes income tax cuts for New Yorkers making $40,000 to $300,000, which will save most middle-class families $300 to $400 a year.
The highest earners will pay an 8.2 percent rate, up from the 6.85 percent they would have paid beginning Jan. 1 after the temporary surcharge expires. New Yorkers filing jointly who make $300,000 to $2 million, or single filers making $150,000 to $1 million, will pay the same 6.85 rate they would have paid come Jan. 1 had there been no deal.Comment on this story
"Our tax code today is just not fair," Cuomo said in a video message. "I am proposing a fair tax system for New York based on a simple truth: the more you make, the higher the rate you pay. That's what's right and that's what's fair and that's what New York deserves."
But he said the state needs revenue, too, as it faces an unexpected $350 million deficit this year and a projected $3.5 billion in 2012-13, after addressing a $10 billion just eight months ago.
"While I am against higher taxes and I believe our long-term economic future for this state is enhanced by in fact lowering taxes to make us more competitive ... If I were to close the entire gap by budget cuts it would decimate essential services doing real harm to the state's economy and strangling local governments all across this state," Cuomo said.
"The bottom line," countered Assembly Republican leader Brian Kolb, "is that taxes are being raised in New York state and we are still not dealing with our state's serious spending problem ... tax hikes have never been the answer for creating more private sector jobs and long-term prosperity for New Yorkers."