So @NYgovcuomo announced the best of all worlds today - no increase in taxes and a magic $1.9 billion in extra revenue!!! Yippee!!!
Well, here's where you have to step back and ask how can tax rates go down and revenues go up? Well, it's a little slight of hand: take the truth, sprinkle in some favorable facts and withhold other information that you'd rather people ignore and you get the desired result :)
The NYS budget was built on the following premise for next year - that the millionaire's tax would expire. The expiration of this tax would have cost the state some $5 billion in potential tax revenues as state income tax rates would have rolled back to pre-millionaire tax levels.
The proposed deal will allow income rates in NY to drop for all taxpayers (this is the truth) from the elevated levels during the period when the millionaire's tax was in place. However, if you compare next year's proposed rates to the rates that would be in place if the Governor did nothing, the rates are going UP for many taxpayers.
So, it really depends on your point of view: is the compromise a $1.9 billion tax hike on the wealthy or is it a $3 billion tax cut for the wealthy?
Consider this example based on rates proposed - a NYS resident making $40,000 will pay $160 less in NYS taxes next yr (compared to 2011 rates) while someone making $1.95 million will pay $41,000 less in NYS taxes next yr.
Again, the spin from the Governor has been that people making $2 million + will pay more in taxes but that's not the complete truth. Those taxpayers will pay more in 2012 than they would have if the millionaire's tax expired as expected, however, they will still pay less in total taxes in 2012 than they do in 2011. A taxpayer earning $10,000,000 in 2011 would have a NYS tax bill of $897,000 and, all other things equal, their tax bill will fall to $882,000 in 2012. However, the Governor claims that he's HIKING TAXES on these people (despite the facts) because their tax bill could have plummeted as the millionaire's tax expired in 2012.
Is your head spinning yet? Welcome to the world of politics.