Millionaires can breathe a bit easier. While President Barack Obama says he wants to let income tax cuts that benefit only the wealthiest Americans expire in 2013, several states are rolling back tax increases for top earners.
New York’s highest tax rates on incomes exceeding $500,000 will fall back to 7.85 percent, from 8.97 percent, this year. Maryland’s 6.25 percent tax on incomes above $1 million expired at the end of 2010, while California’s top tax rate for Millionaires has dropped to 10.3 percent from 10.55 percent.
At least seven states instituted temporary so-called millionaire taxes during the recession. Those levies are becoming harder to justify now that state revenues are rebounding. Overall, state tax revenue grew 12 percent in April compared with a year earlier, which may trim $20 billion from estimated states budget shortfall, according to a recent Goldman Sachs (GS) report. The soak-the-rich drive “just petered out”, says Joseph Henchman, vice president for legal and state projects at the Tax Foundation in Washington, a group focused on lowering taxes. “All of these states are backing away now.”
Business groups have been vocal opponents of the temporary hikes. The Business Council of New York State has opposed efforts to maintain the tax increase on the grounds that such measures are an indirect tax on business income. More business owners who are paid by partnerships or S corporations report business income on their individual returns. Kenneth J. Pokalsky, the Business Council’s senior director of government affairs, says 25 percent of revenue generated from the state’s tax on higher earners came from business income. In California, the Silicon Valley Leadership Group, whose members include Bank of America (BAC), Apple (AAPL), and Microsoft (MSFT), along with 12 other business groups, have told lawmakers that tax increases should be extended only if lawmakers agree to “structural reform” of the budget.
Republicans, who typically oppose tax hikes, now hold a majority of govemorships-29-and many were elected last year after campaigning against tax increases. New Jersey governor Chris Christie, a Republican, received national attention after vetoing a bill that would have extended a tax on millionaires in the state.
Some Democrats are also fighting the higher taxes. New York Governor Andrew Cuomo sparked a battle with fellow party members in the legislature earlier this year by opposing legislation that would maintain the higher rates on individuals earning more than $1 million. Maryland Governor Martin O’Malley, a Democrat, didn’t push to extend his State’s millionaire tax last year. “I would like to think it’s because these are not very good policies,” Henchman says, “If you’re a conservative, you don’t really like these taxes. If you’re a liberal, these services should be so important that everyone should have to pay for them”.
The American public is almost evenly divided on the questions of whether the wealthy should shoulder a higher tax burden. A Gallup poll released on June 2 found 49 percent respondents opposed higher taxes on the rich, while 47 percent supported them.
31. Barack Obama wants to ________.
32. ________ is one of the possible reasons why state revenues revived?
33. What can be inferred from Joseph Henchman’s words?
34. Which of the following statements about the Silicon Valley Leadership Group is correct?
35. Which is probably the best title for this passage?
