A tax cut for the wealthy and corporations would raise as much as $2,000 per household in New York City, according to a new study from the Urban Institute.
The study by researchers at the Urban Policy Institute and New York University examined how income inequality would change if the state were to eliminate the state and local tax deduction for business income and the estate tax.
State- and local-tax deductions for property and income taxes are a big driver of inequality in the country.
In New York, the median household makes $58,800 and the top 1 percent of households take home an average of $9.3 million in state and city taxes, according the report.
For the top one-tenth of the households, that means that if the deduction for state and state local taxes were eliminated, they would earn $2.3 billion more annually.
By comparison, the richest one-fifth of households would see their tax bill jump $1.6 billion.
If the estate and state tax deductions were eliminated in New Jersey, the income inequality impact would be even larger.
That’s because a higher tax rate on estates of people who die will mean that wealthier heirs would have a greater share of the state’s wealth.
A tax cut that raises taxes on the wealthy but reduces state and county taxes would raise nearly $1 trillion annually, according To put the figures in perspective, if every taxpayer in New England had a cut in income tax rates, the state would pay $1,600 more for each resident, the study said.
The Urban Institute study, which is based on a new version of the Tax Policy Center’s Tax Policy Index, found that if New Jersey repealed the state- and state-local tax deduction, its residents would earn about $4,000 more per year.
That means if the tax rate was lowered to 35 percent, the average New Yorker would earn more than $42,000 a year.
New York City Mayor Bill de Blasio, who pushed for a $15 minimum wage during his campaign for the 2016 election, said in a statement that the tax cuts were a win for the middle class and working families.
“Today, I’m happy to announce a new tax cut designed to help our working families and communities: New York’s top income tax rate will drop to 20 percent, while New York businesses will pay a higher rate of 35 percent on their taxes, up from 20 percent.
New York will also reduce property taxes to help families, as we do in every other state.”