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De Blasio's proposed millionaires tax would fund half-priced MetroCards, subway upgrades (update)

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If passed, the tax could generate as much as $800 million annually to fund much-needed subway repairs

Editor’s Note: This post was originally published on August 6, 2017 and has been updated with the most recent information.

UPDATE 8/7/17: On Monday morning, Mayor Bill de Blasio unveiled details for the “millionaires tax” proposal that he alluded to over the weekend. The mayor’s proposal calls for a 0.534 percent increase on the income tax rate for incomes above $500,000 for individuals, and $1 million for couples. That constitutes less than 1 percent of the city’s taxpayers or about 32,000 people, according to the Mayor’s office.

“Rather than sending the bill to working families and subway and bus riders already feeling the pressure of rising fares and bad service, we are asking the wealthiest in our city to chip in a little extra to help move or transit system into the 21st century,” de Blasio said in a statement.

In 2018, the tax will help raise $700 million for the city’s ailing subway and bus system. By 2022, that number will increase to $820 million annually. Of these additional funds, $250 million will be allocated towards half-priced MetroCards; up to 800,000 low-income New Yorkers are expected to benefit from this program.

Brooklyn borough president Eric Adams is on board with the tax, issuing the following statement:

[T]he income tax surcharge that Mayor de Blasio has proposed for the most financially prosperous among us, vested stakeholders in this city, and its critical infrastructure, is a plan all New Yorkers can rally around to meet the long-term needs of our subways. It is a sound revenue stream for funding future upgrades that improve straphangers’ daily commutes, while expanding access to public transportation for hundreds of thousands of our low-income neighbors who face barriers to economic opportunity because they cannot afford to ride a bus or train.

The Riders Alliance is also for the proposed tax:

A millionaires' tax would require some New Yorkers to pay, but the status quo requires literally millions of New Yorkers to pay in the form of lost wages, missed work and days ruined by breakdowns and delays. It's fair to ask the New Yorkers who benefit the most from our city's prosperity to pay a little more to repair the infrastructure that the entire economy relies on.

Mayor Bill de Blasio has plans to propose a “millionaires tax” that could generate funds from wealthy New Yorkers to help foot the bill for much-needed repairs to the city’s subway system as well as provide funding to offer half-price MetroCards to low-income commuters.

According to the New York Times, Mayor de Blasio will announce the tax proposal on Monday, which comes almost two weeks after MTA chairman Joe Lhota unveiled a 30-point action plan to fix the ailing subway system. The plan’s short-term fixes will cost about $836 million to implement, while Phase 2— which involves new signaling systems, new subway cars, and other items— is estimated to cost about $8 billion.

“Rather than sending the bill to working families and subway and bus riders already feeling the pressure of rising fares and bad service, we are asking the wealthiest in our city to chip in a little extra to help move our transit system into the 21st century,” said de Blasio in a statement.

If the tax is approved by New York State lawmakers, it could raise as much as $800 million annually, with the bulk of that, or around $500 million, going toward capital costs for subways and buses. Another $250 million would fund the half-price MetroCard program for low-income New Yorkers.

Mayor de Blasio is also calling upon Governor Andrew Cuomo to stick to his promise of paying $8 billion in state funding toward subway repairs, though Cuomo has some ideas of his own for generating funds for the subway that include offering companies the opportunity to sponsor subway stations for an annual fee.

Update, 8/7/17: Governor Cuomo responded to De Blasio’s proposal with a statement over the weekend. While he doesn’t outright dismiss De Blasio’s idea, Cuomo does note that to ensure that repairs happen now, the city should pony up half of the funding for the action plan.

The subway system is in crisis today. We need two things: immediate action, and a long-term modernization plan. One without the other fails the people of the city. …There is no doubt that we need a long-term dedicated funding stream. But there is also no doubt that we cannot wait to address the current crisis. Riders suffer every day and delaying repairs for at least a year is neither responsible nor responsive to the immediate problem, or riders' pain.’

One interesting thing to come from this: Cuomo mentioned that the state is looking into “dedicated revenue proposals” to be discussed when the legislature reconvenes next year. According to Times transit reporter Emma Fitzsimmons, congestion pricing may finally be on the table:

The idea has long been floated by transit advocates, many of whom see it as an essential method of generating revenue for transit improvements.