New York City's eight million hardy souls are used to a lifestyle in which the best of everything is at their disposal. But now residents may have to do more with less as the city struggles to find its way out of a deepening fiscal crisis.
In an attempt to close a $3.8 billion budget gap, Mayor Michael R. Bloomberg has proposed a draconian $44.5 billion budget that, without significant state aid, would mean extensive public service cuts, massive layoffs, the closing of facilities like firehouses, senior citizen and health care centers, and reduced funding for schools, libraries, museums, zoos, and other cultural institutions.
In recent months, city dwellers have been hit with an 18.5 percent property tax hike, higher rents, maintenance fees, common charges and insurance premiums, rising fuel costs and increased subway and bus fares. Now the cornerstone of a state Legislature budget proposal, endorsed by the mayor, asks city residents to pay even more.
The sales tax is proposed to jump from 8.25 percent to 8.63 percent and the city's wealthiest residents would be taxed at a different personal income tax rate than lower or middle-income wage earners. Under the budget agreement, individual taxpayers earning more than $100,000, heads of households making more than $125,000, and married couples making more than $150,000 would now pay a higher income tax rate. The current top tax rate is 3.65 percent. The rate for wealthier New Yorkers will rise to 4.25 percent this year and drop to 4.175 percent in 2004, and 4.05 percent in 2005. However, city residents earning more than $500,000 would pay 4.45 percent each of the next three years.
According to the city's Independent Budget Office, the new surcharge would rise proportionately depending on earnings level. For example, a single filer whose taxable income is $125,000 would pay $4,441 in taxes under the 3.65 percent rate. At 4.25 percent, that same taxpayer would owe $4,593, a 3.4 percent increase, according to Doug Turetsky, IBO communications director. A married couple filing jointly and having $250,000 in taxable income would pay $8,900 under the existing income tax rate. Under the new rate, the couple's taxes would jump to $10,615, a 19 percent increase.