They couldn’t spare a penny for minimum-wage workers, but state lawmakers found a way to help wealthy boat and plane owners.
The state budget deal hammered out by Gov.Cuomo and legislative leaders gives lucrative tax breaks for the purchases of mega yachts and private airplanes.
“It’s completely unjust that, while the legislators aren’t giving workers like me a raise, they’re giving this benefit to millionaires and billionaires for their yachts,” said Manuel Melendez, a minimum-wage restaurant worker in Brooklyn and member of the immigrant activist group Make the Road New York.
“It shows that our government is working for the wealthy and not for me,” Melendez added.
Under the budget deal, people buying a yacht in New York would pay sales tax on only the the first $230,000 of the purchase price, regardless of the vessel’s total cost.
The buyer of a $1 million yacht would face the same $9,200 state sales tax that the purchaser of a $230,000 boat would, officials said.
“A rising tide seems to lift only yachts,” scoffed Ron Deutsch, executive director of the liberal-leaning Fiscal Policy Institute.
New Yorkers seeking to buy their own plane would get an even better deal. They would pay no sales tax on the entire purchase of any plane that carries fewer than 20 people.
The tax breaks for the 1% were included in the state’s soon-to-be-adopted budget as the Legislature nixed several other measures that would have helped needy and working-class New Yorkers, including property tax relief and the DREAM Act, which would make children of illegal immigrants eligible for state tuition assistance.
“I guess the yacht lobby is stronger than people thought,” said Mike Murphy, a spokesman for the Senate’s Democratic conference. “It is outrageous that we are giving tax breaks to buy a yacht but couldn’t raise the minimum wage or provide real property tax relief.”
Supporters of the tax breaks said they would boost New York’s economy and make the state competitive with other states that already offer such exemptions.
“We are trying to encourage people to buy their boat, to maintain their boat and use their boat in New York,” said a Cuomo administration official, who added that many New Yorkers purchase planes in Connecticut because that state doesn’t tax such expenditures.
Cuomo did not include the tax breaks in his initial budget proposal, but signed off on them after the Assembly and Senate included versions of the yacht exemption in their spending plans. The Senate also pushed for the exemption on plane purchases.
“It makes New York State competitive, and that would afford jobs for people to work above the minimum wage,” added Senate Majority Leader Dean Skelos (R-Nassau County). “It’s about job creation.”
Skelos argued a minimum-wage increase was unnecessary because many lower-rung workers already receive an earned income tax credit from the state.
“They’re not making just minimum wage,” Skelos said. “They get a check from the government. They’re not paying taxes. It’s about $1 billion a year that’s going to them above the minimum wage.”
Senate Finance Committee Chairman John DeFrancisco (R-Syracuse) went further, saying many minimum-wage earners also receive a tax credit from the federal government.
“I think it’s been misrepresented that people are living on just the minimum wage because they’re getting huge, in my mind in relation to the amount of income they’re earning, credits,” DeFrancisco said. “Those are tax credits, too. Just like for the airplanes and the ones you mentioned before. Tax credits forthe poor.”
New York’s $8.75-an-hour minimum wage is set to go up a quarter an hour at the end of the year, and Skelos suggested the state study the impact on business and job creation before moving ahead with any further increases.
Word of the tax breaks for boat and plane buyers came as lawmakers began adopting budget bills Monday and aimed to finish before the state’s new fiscal year begins Wednesday.
Cuomo administration officials and legislative leaders also worked through the day Monday to make final the details of the “framework” agreements on education and ethics reforms that were announced late Sunday night.
The ethics deal calls for lawmakers to disclose more information about their outside income, including the names of legal clients who pay them more than $5,000. Lawmakers could petition to exempt the names of clients if they feel disclosure could pose a hardship to them or the clients.
State Attorney General Eric Schneiderman on Monday slammed the ethics measure as window dressing that won’t “get at the root of corruption” in Albany.
“This is more tinkering around the edges,” said Schneiderman, who has called for a total ban on lawmakers’ outside income.
“You simply can’t handle this through disclosure,” Schneiderman said. “A ban on outside income accompanied by a significant raise is the right way to do this.”
In a shot at Cuomo, he said that despite “recycled language about how this really solves all the problems,” it would continue a cycle of “more investigations, more prosecutions, and further erosion of the public confidence.”
Cuomo has defended the ethics measure as “the nation’s strongest and most comprehensive rules for disclosure of outside income by public officials.”
Also Monday, Timothy Cardinal Dolan expressed frustration that lawmakers once again failed to include an education tax credit sought by the New York State Catholic Conference as a way to boost donations to parochial schools. The credit is opposed by the state’s teachers unions.
“Our elected officials must cease allowing public school teachers unions intent on creating a government school monopoly to continue dictating education policy in our state,” Dolan said. “We turn again to our leaders to do the right thing, and pass the education tax credit, not for any interest group, but for the children of our state.”
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