If Congress fails to act to avert sweeping federal tax hikes and sharp spending cuts by Jan.1, New Yorkers could face more than $43 billion in tax increases and lose $609 million in federal aid in 2013, New York State Comptroller Thomas P. DiNapoli said last week.
“There is real danger ahead for New York’s economy if America goes over the fiscal cliff,” DiNapoli said. “Many New Yorkers are still recovering from the Great Recession and struggling each day to make ends meet - and some are literally digging out from Sandy’s devastation. The fiscal cliff’s massive one-two economic punch could easily push the state’s economy backward.”
DiNapoli’s on the impact of the fiscal cliff on New York State showed that federal taxes would rise sharply on Jan. 1, 2013 for virtually all working New Yorkers. His analysis found the pending 47 percent increase in the payroll tax rate would cost New Yorkers $7.7 billion in 2013 and immediately reduce paychecks. If action is not taken, an additional 3.4 million New Yorkers would be required to pay the Alternative Minimum Tax, up from around 500,000 currently.
New York families would suffer serious tax consequences if an agreement cannot be reached. An average New York family with two children would lose $1,000 a year from the reduction of the child credit (from a $1,000 credit per child to $500 credit per child). A low-income four-person family with two children making $34,000 could lose an additional $1,000 in tax credits from the changes in the Earned Income Tax Credit and refundability of this credit would be eliminated for many low income families.
The fiscal cliff also includes automatic cuts in federal spending, known as sequestration, which would compound existing fiscal challenges for New York State and its local governments. The State Division of the Budget has estimated that beginning in 2013, state and local governments in New York could lose approximately $5 billion in federal funding over nine years. According to Federal Funds Information for the States, the state would lose $609 million in aid in 2013, including $210 million in education funding, $137 million for health and human services, and $128 million for housing programs.
In addition, going over the fiscal cliff could undo progress made in New York’s securities industry, one of the primary economic drivers of the New York State and New York City economies, DiNapoli said.
In November, the New York Stock Exchange reported that third-quarter profits for its member firms totaled more than $7 billion, bringing year-to-date profits to $17.6 billion. This is the third highest level of profitability on record for this point in the year. Wall Street is on pace to earn more than $20 billion in 2012, twice the level assumed in New York City’s financial plan.
If Congress fails to act to avert sweeping federal tax hikes and sharp spending cuts by Jan.1, New Yorkers could face more than $43 billion in tax increases and lose $609 million in federal aid in 2013, New York State Comptroller Thomas P. DiNapoli said last week.
“There is real danger ahead for New York’s economy if America goes over the fiscal cliff,” DiNapoli said. “Many New Yorkers are still recovering from the Great Recession and struggling each day to make ends meet - and some are literally digging out from Sandy’s devastation. The fiscal cliff’s massive one-two economic punch could easily push the state’s economy backward.”
DiNapoli’s on the impact of the fiscal cliff on New York State showed that federal taxes would rise sharply on Jan. 1, 2013 for virtually all working New Yorkers. His analysis found the pending 47 percent increase in the payroll tax rate would cost New Yorkers $7.7 billion in 2013 and immediately reduce paychecks. If action is not taken, an additional 3.4 million New Yorkers would be required to pay the Alternative Minimum Tax, up from around 500,000 currently.
New York families would suffer serious tax consequences if an agreement cannot be reached. An average New York family with two children would lose $1,000 a year from the reduction of the child credit (from a $1,000 credit per child to $500 credit per child). A low-income four-person family with two children making $34,000 could lose an additional $1,000 in tax credits from the changes in the Earned Income Tax Credit and refundability of this credit would be eliminated for many low income families.
The fiscal cliff also includes automatic cuts in federal spending, known as sequestration, which would compound existing fiscal challenges for New York State and its local governments. The State Division of the Budget has estimated that beginning in 2013, state and local governments in New York could lose approximately $5 billion in federal funding over nine years. According to Federal Funds Information for the States, the state would lose $609 million in aid in 2013, including $210 million in education funding, $137 million for health and human services, and $128 million for housing programs.
In addition, going over the fiscal cliff could undo progress made in New York’s securities industry, one of the primary economic drivers of the New York State and New York City economies, DiNapoli said.
In November, the New York Stock Exchange reported that third-quarter profits for its member firms totaled more than $7 billion, bringing year-to-date profits to $17.6 billion. This is the third highest level of profitability on record for this point in the year. Wall Street is on pace to earn more than $20 billion in 2012, twice the level assumed in New York City’s financial plan.
