New Bill Would Raise Capital Gains Tax on Wealthy New Yorkers
The new 7.5% tax could apply to single New York residents with a taxable income of over $400,000.
A New York state legislator wants high-income, high-net-worth state residents to pay more taxes on capital gains.
Sen. Gustavo Rivera, D-N.Y., introduced S. 2162 Thursday. The bill that would impose an additional state income tax ranging from 7.5% to 15% on the long-term capital gains of taxpayers with New York state taxable income over a minimum level.
In New York, capital gains are taxed as income, at marginal rates from 4% to 10.9%.
Fund Our Future, a tax policy project associated with State Innovation Exchange and the State Revenue Alliance, promoted that bill, along with tax bills introduced in California, Connecticut, Hawaii, Illinois, Maryland, Minnesota and Washington state, at a press conference Thursday.
What It Means
In some states, high-net-worth clients could face new state-level efforts to tax their assets.
The Backdrop
Fund Our Future was started in 2019, with support from the American Federation of Teachers, to increase public funding for education.
The project’s website has the headline “Make the Wealthy Pay What They Owe.”
One of the speakers at the Fund Our Future press conference was Rep. Pramila Jayapal, D-Wash., who may be best known in the financial services sector for introducing health care system change bills that could eliminate most forms of private health insurance.
New York Bill Details
The new additional tax would apply to “low-taxed investment income,” with that term defined to mean “the amount of an individual’s New York taxable income attributable to long-term capital gain, dividends or any other type of income taxed under the rates of Section 1(h) of the Internal Revenue Code.”
The bill text does not refer directly to annuities or to life insurance.
A new 7.5% additional tax on capital gains would phase in for a single taxpayer, or a resident estate or trust, with New York state taxable income over $400,000; a resident head of household with state taxable income over $500,000; and a resident couple with a state taxable income over $500,000.
The 7.5% tax would apply to “New York taxable income from long-term capital gain,” starting with the first $50,000 over the minimum income thresholds.
A higher 15% additional tax rate would begin to phase in for single taxpayers, estates and trusts with state taxable income over $800,000 and to joint filers and household heads with state taxable income over $1 million.
The 15% additional tax would be “phased in proportionally, beginning with a phase-in fraction of 50%, over the first $100,000 of New York taxable income” over the $800,000 threshold for single filers and over the $1 million threshold for other affected filers.
Legislative Mechanics
- Rivera represents a district in the Bronx. He introduced S. 2162 with support from 19 co-sponsors.
- The bill is under the jurisdiction of the New York Budget and Revenue Committee.
- Rivera is not a member of that committee, but three of the 19 co-sponsors are budget committee members, and one co-sponsor, Sen. Andrew Gounardes, is the committee chair.
- The committee has seven members.
- Democrats control both the Assembly and the Senate in New York.
- The governor, Kathy Hochul, is a Democrat. Hochul said Jan. 10, during a State of the State speech, that New York state will not increase income taxes this year.
Pictured: Albany, New York (Matt Wade/ALM)