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DiNapoli: Fiscal Cliff Could Cost NY $43B

Posted By Joseph Spector On December 6, 2012 @ 10:33 am In Other | Comments Disabled

If the country goes off the fiscal cliff Jan. 1, New Yorkers could face more than $43 billion in tax increases and lose $609 million in federal aid, Comptroller Thomas DiNapoli said

“There is real danger ahead for New York’s economy if America goes over the fiscal cliff,” DiNapoli said in a statement. “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.”

The report from the Democratic comptroller comes as New York is also seeking about $40 billion in federal disaster relief from Superstorm Sandy.

If Congress doesn’t remedy the fiscal cliff before January, New York would see federal taxes rise, including a 47 percent increase in the payroll tax rate that would cost $7.7 billion. Also, 3.4 million people would have to pay the Alternative Minimum Tax (AMT), up from about 500,000 currently.

He said the change in the AMT would amount to an average of $5,180 more on people’s taxes.

“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),” DiNapoli wrote. “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.”

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