Good morning – we want to make sure you saw this op-ed by the Manhattan Institute’s Paul Dreyer in today’s Times Union:
Commentary: This simple reform could make a big difference to N.Y. taxpayers
By Paul Dreyer
The Albany Times Union
State leaders pride themselves on affordability measures, like Gov. Kathy Hochul’s “inflation refund,” but with one hand the Legislature quietly takes back far more — in hidden tax hikes.
“Bracket creep” occurs when inflation-driven pay increases push New Yorkers into higher tax rates or erode fixed-dollar deductions. That’s why the federal government and most states index their tax rates to inflation.
But not New York. The Legislature allowed indexation of personal income tax brackets to sunset in 2016. That means wage increases meant only to keep pace with rising prices now trigger higher marginal rates and shrink the real value of credits and deductions, imposing an “inflation tax” beyond the effects of inflation, like higher grocery prices.
In our latest Manhattan Institute report, my co-authors and I found that a single filer earning $25,000 in 2016 incurred more than $1,000 in cumulative losses by 2023 because thresholds and deductions failed to keep pace. Moreover, the $8,000 standard deduction fixed in 2016 would need to have risen to about $9,223 by 2023 to maintain its real value. Without indexation, taxpayers now owe taxes on an extra $1,223 of income each year.
These tax hikes compound annually into significant cumulative losses, and lower-income families feel the pinch most.
Keep reading at TimesUnion.com
