FAIRNESS FEES:

Reforming Our State’s Income and

Property Tax Structure

By Jumaane D. Williams
NYC Council Member & Candidate for NYS Lieutenant Governor
 Fairness Fees

T
he needs of New Yorkers are as pressing now as they have ever been, with the added
challenge of a hostile Federal administration. We can rely on Washington for neither
financial nor legal support in the days ahead as we provide for the people of this State.
As we look to forge a 21st-century standard of life in the face of a Federal administration with
an 19th-century worldview, we have to reform and rebuild our income and property tax struc-
tures to reflect our new reality. As New York State Lieutenant Governor, I would focus and
champion the following:

Income taxes -- adjust the brackets upward

 Our personal income tax brackets were built for an income distribution like we had
in the 1980s -- the Reagan era

 In the forty years since then, we’ve seen an explosion of wealth at the very top while
most New Yorkers are struggling or actually moving backwards

 In New York State, the top 1 percent earned 45 times more than the bottom 99 per-
cent, the greatest disparity of any state in America (1)

 Adjusting personal income taxes at the high end -- incomes of $5 million per year or
more -- would provide fairness and reduce inequity

Property taxes -- providing relief for working families and seniors

 In the 90’s, then-New York State Governor George Pataki and then-New York State
 Senate Majority Leader Joe Bruno cut fees on multimillionaires and claimed to balance
the budget. In fact, the cost of the cuts was passed on to counties and municipalities,
who were forced to reduce and eliminate services due to lack of resources

 Property taxes went up for working people, while income taxes went down for mil-
lionaires and billionaires in Manhattan

 Property tax caps are good stop gap, but if we cut services, in the long run it hurts
New Yorkers. We need to do better than just property tax caps; we need property tax re-
lief for the hardest-pressed homeowners -- a check to you from the State, funded by re-
storing fairness fees on multimillionaires ($5 million or more)

In addition to this tax reform, we must also look to ways to fairly and responsibly grow our re-
sources to provide for all in our State. Those who would argue there is not enough to fund all
of what the people of New York need either can not - or will not - consider one of the oldest
lessons: to whom much is given, much is required. In that spirit, I recommend several
measures that would yield over $20 billion for the State budget, while only touching hedge
funds, billionaires, multi-millionaires, and others of the super-wealthy, many of whom support
these ideas.

STOCK TRANSFER FEE: $10-14 BILLION

 From 1905 to 1980, New York State collected a small fairness fee on Wall Street
stock trades

 In the Reagan era, we began giving the money back to Wall Street - literally collect-
ing this money and then cutting a check - now up to $14 billion every year

 The majority of this money would be collected from high-frequency “flash traders,”
not Grandma or casual traders in the stock markets

 If we just rebated $4 billion to long-term investors we’d still have $10 billion for
community needs

 New York should reinstate this fee and use it to properly fund our public schools and
give property tax relief to working-class homeowners statewide

STOCK BUYBACK TRANSFER FEE $2 BILLION

 Big multinational corporations are using their big new tax cuts to make their wealthi-
est investors even richer

 They’re not creating millions of new jobs, they’re not giving big pay raises to their
lowest-paid workers – they’re using the money for huge stock buyback
  New York State could raise $2 billion a year from a .5% fairness fee on the stock
buybacks that are hurting our economy and making inequality worse

MULTIMILLIONAIRES FEE $4 BILLION

 A fairness fee to supplement existing assessments on multi-millionaires

 Raises $4 billion per year; included in this year’s Assembly one-house

 Addresses the deep unfairness of the new federal tax plan

 Assessed only on those people making more than $5 million every year

CARRIED INTEREST LOOPHOLE CLOSURE $3.5 BILLION

 Backed by Cuomo, Assembly and Senate Democrats

 Closes a loophole that Trump promised to close but didn't

 A fairness fee on hedge fund and private equity managers who can well afford to
pay

LUXURY REAL ESTATE FEE $500 MILLION

 Progressive fairness fee on real estate transactions over $5 million

 Part of a package that raises $500 million per year in Assembly one-house

 Addresses the steep increase in the most luxurious real estate in Manhattan

 New York fees on these properties are lower than other global centers like Hong
Kong, London & Paris

The necessary resources to provide for all are available. New York State government can
raise the money for needed investment in schools, transportation, housing, clean energy infra-
structure and healthcare for all -- and provide direct property tax relief to the hardest-pressed
homeowners across our state. Rebuilding and reforming our tax system based on principles of
fairness will help all New Yorkers and make our state a better place to live, work and raise a
family. All that requires is the will and commitment to make it a reality.
 Spending Cap

H aving discussed where we can equitably and fairly raise revenue to better our State, I
would like to discuss the other half of the equation: investing this revenue, or more
specifically, the will to invest it responsibly. I believe the public treasury is a resource
that should be deployed to the betterment of the public. To that end, the imposition of an arbi-
trary cap on public spending is a shackle we cannot afford in good times, and even less when
faced with a hostile Federal administration.

It is important to distinguish the practice of an arbitrary spending cap from the concept of caps
in general. For example, New York caps the growth in the property tax. This cap is not arbi-
trary but established through the legislative process, formed through open debate and negotia-
tion. While I have expressed objections on how the cap is executed in New York City, I sup-
port the principle of a cap on property tax increases. The housing crisis in New York is deep
and urgent enough without opening the door to increasing burdens on our homeowners.

By the same process, I believe a spending cap can have a place in budgeting. I strongly agree
with the words of former Vice-President Joe Biden: “Show me your budget, and I’ll tell you
what you value.” To that end, spending caps can help frame debate around the budget and
make the final product a true representation of values.

However, an arbitrarily imposed cap from the execu-

tive defeats this purpose on all fronts. When adhered
to, the executive voluntarily restricts itself from in-
vesting money to solve real problems that New York-
ers face. But because an arbitrary cap lacks the legit-
imacy and force given through open debate and ne-
gotiation in the legislative process, it is more suscep-
tible to violation when political considerations are
conducive to excess spending, violations New York
State is familiar with under the Cuomo Administra-
tion.

Beginning with the 2011-2012 Budget, the Governor has long boasted of adhering to a 2 per-
cent cap on State Operating Fund (SOF) spending (2) - the monies directly allocated for agency
operations and debt service and, therefore, most reflective of policy decisions. In the February
2018 Executive Budget, the Governor claimed SOF spending increased by just 1.9 percent.
However, an analysis by the Citizens Budget Commission demonstrated this number was
achieved not through policy decisions but accounting manipulation: moving some spending
items off of the SOF books, reclassifying other items as capital spending rather than operation-
al, and more. (3) When this is undone, the CBC calculates SOF spending actually increased 4.1
percent. This marks the second consecutive attempt since the 2016 Presidential election that
the Governor attempted with sleight-of-hand to allow for increased spending while trying to
stay true to his personal limitations. (4)

This is not to argue the spending should not have been done as a rule. The needs of New York-
ers are real and it is the obligation of their elected leaders to meet them, particularly on the
State level. 1995 stands as a stark reminder that spending cuts on the State level do not exist in
a vacuum but are passed on to local government to make good the loss – from $17.3 million in
Erie County (5) to $670 million in New York City (6) , with social services most frequently tak-
ing the hit.

Without an arbitrary spending cap, the state would be better able to solve a myriad of pressing
challenges, including but not limited to the following:
 Housing: At a time when the Federal administration and
the state have historically disinvested in public housing, and
when the federal government has proposed to triple rents on
public housing residents (which would lead to a spike in
evictions and increased burdens on shelter systems and oth-
er public benefits), the state must be ready to invest addi-
tional dollars to maintain facilities and keep people in their
homes. (7) For example, in NYCHA, there is almost $30
billion needed for repairs. We need more than the one-time
infusion of $250 million the Governor delivered recently with a host of strings attached.
The fairness fees, as proposed, would allow us to build housing units targeted for deeply
low-income New Yorkers and we can get consistent investment in our public housing.

 Transportation: States and localities also cannot rely on

the federal government to solve transportation issues. For ex-
ample, the New York City subway system is in a crisis and the
state has yet to invest the money needed to improve core opera-
tions for nearly 8.5 million New York City residents. (8) Experts
predict that the New York City subway system’s deficit may
swell beyond $1 Billion in three years. (9)

 Environment/Climate Change: A highlight consequence of Trump’s abdication of re-

sponsibility has been Scott Pruitt’s tenure as EPA Administrator. Pruitt’s determination to
rollback Obama-era environmental regulations and give cover to corporate polluters comes
right when Hoosick Falls is in litigation against the companies that poisoned their ground-
water (10) and Newburgh has filed suit to compel sufficient actions to clean their water.
(11) An arbitrary cap prohibits the executive from reacting swiftly to direct needed re-
sources when emergencies such as these appear. We can also use funding to build out infra-
structure to move from fossil fuels to renewable energy.

 Healthcare: The current federal government will take every opportunity-by law or by
executive action- to dismantle the Affordable Care Act, (12) along with cuts to Medicare and
 Medicaid. (13) These programs are literally lifelines to low and moderate-income Americans.
The White House has already announced plans to cut $7 billion in Affordable Care Act sub-
sidies, which would cause at least 1 million Americans to lose coverage, alone. (14) If they
are successful, millions more New Yorkers will rejoin the ranks of those uninsured. State
investment is needed to stabilize New York’s healthcare make and ensure coverage.

 Education: The Governor owes New York

State schools billions dollars as a result of the
court’s finding in the Campaign for Fiscal Eq-
uity. While the Governor has instituted some
increases in the budget over eight years, he has
also cut the budget several times during that
same period. The 2018 increase still under-
funds the state’s schools, and will require dis-
tricts, especially poorer ones, to make tough
choices as the school year starts in the Fall. All told, he has never fully funded schools ac-
cording to the court’s requirement. He also gave himself veto-power over a local school dis-
trict’s spending priorities. (15) (16) (17)

A s the People’s Lieutenant Governor, I want to use my office to ensue that these issues are
continuously highlighted and advocated for. New Yorkers should know what’s happening
with their money and how it can best be used to deal with the kind of issues I’ve been hearing
about as I travel around the state.
*****
1. http://fiscalpolicy.org/nys-leads-nation-in-income-inequality
2. https://www.governor.ny.gov/news/governor-cuomo-and-legislative-leaders-announce-agreement-2016-2017-state-
budget , “The budget holds the growth in state spending to two percent for the sixth consecutive year…”
3. https://cbcny.org/research/twice-much-advertised
4. https://cbcny.org/research/when-2-percent-isnt-2-percent
5. http://buffalonews.com/1995/06/16/county-loses-17-3-million-in-state-aid-gorski-accuses-pataki-of-breaking-
promises/
6. http://www.nydailynews.com/archives/news/rudy-pols-budget-pact-balanced-gimmicks-article-1.686688
7. https://www.washingtonpost.com/news/wonk/wp/2018/04/27/hud-secretary-ben-carsons-proposal-to-triple-rents-for-
poorest-households-would-hurt-single-mothers-the-most/?noredirect=on&utm_term=.bb97b8debd1b
8. https://www.nytimes.com/interactive/2017/12/22/nyregion/what-would-it-take-to-fix-new-yorks-subway.html;
9. http://newyork.cbslocal.com/2017/11/16/mta-budget-deficit-predictions/
10. http://wamc.org/post/hoosick-falls-mayor-discusses-decision-sue-over-pfoa
11. https://www.huffingtonpost.com/entry/newburgh-water-pfos_us_5aa0368ce4b0e9381c14d4f7
12. https://www.nytimes.com/2017/10/09/us/politics/obamacare-trump-cuts-open-enrollment.html
13. https://www.cnbc.com/2018/02/12/trump-budget-calls-for-renewed-effort-to-gut-obamacare.html
14. https://www.google.com/url?q=https://www.marketwatch.com/story/6-critical-ways-trumps-cuts-in-obamacare-
subsidies-could-impact-you-2017-10-13&sa=D&ust=1525018792610000&usg=AFQjCNGJxZQPa4-
nZHaWnFhd8V3idNNfxA
15. https://www.politico.com/states/new-york/albany/story/2018/03/31/state-resolves-school-issues-reaches-final-deal-
on-1683-billion-budget-340808
16. http://www.edlawcenter.org/news/archives/new-york/governor-cuomos-budget-again-shortchanges-new-york-
students.html
17. http://www.aqeny.org/wp-content/uploads/2014/08/REPORT-NY-Billions-Behind.pdf