“Bill de Blasio makes Obama look like Ronnie Reagan,” joked one Wall Street big wig, who half-heartedly threatened to move his firm out of New York.
It’s not an uncommon sentiment on Wall Street. I’ve heard similar complaints from other bankers, albeit without all the drama. De Blasio’s platform has ruffled the feathers of many of New York’s wealthy, who feel a heavy-handed mayor could stunt recent economic growth, or at the least take a bite out of their paycheck. Many Upper East Siders didn’t take too kindly to “plowgate,” either.
The hottest current topic is the mayor’s pre-K plan, which will provide universal education for New York’s pre-K students as well as funding for after-school programs. The issue isn’t the program, but how de Blasio plans on getting the funding: higher taxes on the super wealthy. The bill, if passed, would increase the city’s marginal tax rate from 3.876% to 4.41% on taxable income exceeding $500,000.
How big of an effect would the new tax have? That all depends on how many zeros are in your paycheck. The Independent Budget Office provided us with some general numbers and a few specific scenarios.
If you make between $500k and $1 million, the average additional tax burden would be $973, according to the IBO. So for some top earners, the tax is roughly equivalent to the price of a cup of coffee a day, as de Blasio has said numerous times.
The average burden for those making between $1 million and $5 million is $7,793, for $5m-$10m it’s $33,518, and for the 1,200 New Yorkers who make over $10 million per year, they’ll pay an average additional tax of $182,893. Ironically, there are 40,000 New York City workers who make over $500,000, representing almost exactly 1% of resident filers. So the tax quite literally is aimed at the demographic that de Blasio and other politicians often reference.
Below are four scenarios created by the IBO. The first two are based on standard deductions, the latter two assume itemized deductions that are deemed typical for each income level and household type. It’s not possible to pinpoint what some of the bigger names on Wall Street would be forced to contribute, as we have no idea of their exemptions and deductions, but do some simple math and you can ballpark it.
One thing to remember though. The marginal tax rate being pitched isn’t even a recent high. Mayor Bloomberg had it at 4.45% for a period back in the mid-2000s, according to CNN.