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Hard work for economic fairness pays off
UFT members, allies lead successful fight for first education funding increase from state in three years
by Maisie McAdoo | December 22, 2011 New York Teacher issue
Capping a yearlong political battle by the UFT and its labor and community allies for economic equity, the New York State Legislature on Dec. 6 passed legislation that brought a measure of fairness to the state tax code while providing a much-needed boost in education funding for next year.
The extra $2 billion in revenue expected to be generated by the tax agreement will provide for a 4 percent increase — $800 million — for schools statewide, of which city schools are expected to receive $330 million. It will mark the first increase from the state after three years of serious cuts to education.
“It’s a great victory, and it will bring some overdue relief to our schools,” said UFT President Michael Mulgrew.
The UFT president gave credit to UFT members and the union’s partners statewide for paving the way to the agreement.
“UFT members, standing hand in hand with our community allies, have been out in front on these issues,” Mulgrew told members. “From the massive march on Wall Street in May to the rallies this fall and your phone calls to Albany, your commitment and dedication to our schools and communities has been second to none.”
Mulgrew also thanked Gov. Andrew Cuomo, Assembly Speaker Sheldon Silver and Senate Majority Leader Dean Skelos for their leadership, as well as state lawmakers, praising the cooperation between Republicans and Democrats as “a stark contrast with the political deadlock in Washington.”
A fairer tax code and budget
The new code will create a more progressive tax structure in the state. It will lower the tax burden on middle-income earners and collect more from those with annual incomes of $2 million or more. It revises what has been essentially a flat tax, under which couples who make $40,000 a year pay the same marginal tax rate of 6.85 percent as those making $500,000 a year.
The agreement moves the state closer to addressing the projected $3.5 billion budget gap that it is facing next year. In addition to the new school funding, increases are also planned for Medicaid, upstate flood recovery, job creation for urban youth and road and bridge construction.
The new tax package — enacted by a unanimous vote in the state Senate and by a lopsided vote in the Assembly in which only eight lawmakers voted no — drops the state income tax rate to 6.45 percent from the current 6.85 percent for families with adjusted income of $40,000 to $150,000. Those making $150,000 to $300,000 will pay 6.65 percent. On incomes between $300,000 and $2 million, taxpayers will pay the same 6.85 percent tax rate that they pay now.
But for top earners, those with incomes over $2 million, the rate goes to 8.82 percent. That top rate is actually slightly lower than the 8.97 percent that high earners have paid for the past three years with the “millionaire’s tax” surcharge, which is due to sunset this year. But the new top rate is more than millionaires paid in the past or were scheduled to pay next year.
The top-earner tax, which will begin with 2012 tax returns, will extend through 2014. The cuts to lower earners starting in 2012 will be permanent.
A successful campaign
The tax agreement was the culmination of a political campaign by the UFT and its allies that began last spring, after the 2011-12 state budget led to big reductions in education and health funding and layoffs of thousands of state and city workers.
The UFT joined with a statewide labor coalition and NYSUT members to call for an extension of the millionaire’s tax. Meanwhile, unions, the unemployed and parents forged a powerful alliance with the Occupy Wall Street movement, which was shining a spotlight on the growing share of state income that was concentrated in the hands of “the one percent,” in part because of the flat state tax.
This fall, coalition members reached out to upstate residents, both Democrats and Republicans, whose towns were hard-hit by the state property tax cap and Hurricane Irene, while calling their state elected officials to account.
The messages got through to Albany, as the state budget deficit for next year continued to grow. Gov. Cuomo, who generally opposes tax increases, said he faced “a different economic reality than anyone anticipated.”
The governor explained what led to his change of heart.
“If you want to say, ‘I don’t want to vote for more revenues — no how, no way,’ then you’re saying you’re voting for zero and zero for education and Medicaid,” Cuomo told The New York Times. “That was the reality for me.”