“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," he told the Business and Labor Coalition of New York (BALCONY).
“Voters sent a clear signal in November that a deal must be done and that there must be a balanced approach to increased revenues and spending cuts. New York’s congressional delegation and President Obama are working hard to achieve this goal and they have my continued support as they fight for New Yorkers. Now is the time for Washington to show leadership for the good of the country with a reasoned compromise that puts us on the right path,” DiNapoli added.
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 (AMT), up from around 500,000 currently.
DiNapoli notes changes in the AMT would require impacted New Yorkers to make large, unplanned additional tax payments in the tax returns due by April 15, 2013 – an average of $5,180 more than they would pay under this year’s tax provisions. Without action, more than half of those who pay federal income tax in the Empire State would pay the AMT, which Congress originally created to ensure that the highest-income earners in the nation paid a fair share of taxes.
He also warns 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.