Education leaders and lawmakers want expansion of millionaire’s tax to fund schools

Assemblyman Jeffrion Aubry, D-Corona, speaks to supporters of expanding the millionaire’s tax, including NYSUT, UFT, and AQE. Gazette photo by Sarah Eames.

Legislators, teachers, advocates and representatives from New York State United Teachers (NYSUT) and the United Federation of Teachers (UFT) rallied Tuesday in the capital for tax code changes to fund schools across New York. The expansion of the “millionaire’s tax” and closing of the carried interest loophole will bring in about $5.6 billion and $3.5 billion annually, according to NYSUT.

Education advocates met with legislators to push for the board of Regents recommended $2.1 billion increase in school aid, as well as to push for the expansion of taxation on New York’s wealthiest, and closing the carried interest loophole, which benefits hedge fund managers by taxing their investment profits less than their filed income.

The bill to close this tax loophole, (A.3554, S.1991) is sponsored by Assemblyman Jeffrion Aubry, D-Corona, and Senator Jeff Klein, IDC-Bronx, would tax carried interest income the same as traditional earned income. Currently, carried interest income is taxed at a rate 20 percent lower than earned income. These gains are essentially a performance fee earned from successful investments, and benefit hedge fund managers and private equity partners.

According to NYSUT executive vice president Andrew Pallotta, this loophole allows financiers to pay lower taxes on their income than the average New Yorker. “Their income should be taxed the same as income earned by retail clerks, nurses, and elementary school teachers,” he said. “For too long, the wealthy elite have exploited the carried interest loophole to avoid paying their fair share in taxes, and that has deprived public schools and colleges of funding they need.”

Teachers and school advocates, like Jasmine Gripper, legislative director of the Alliance for Quality Education (AQE), are fighting for the $4.3 billion owed to schools across the state, according to the foundation aid formula, which determines how much funding goes to different schools based on need. “We’re asking for a three year phase in of the money that is owed,” Gripper said. “ the Foundation aid formula works, but not when it’s not paid to the schools that need it the most.”

Beyond schools, advocates stressed that the revenue from an expanded millionaire’s tax and a closed carried interest loophole could also fund hospitals and state and city universities. “Those in power have decided to not have the richest New Yorkers pay their fair share,” Barbara Bowen, President of CUNY Professional Staff congress, said. “Don’t be fooled. It was not an accident.”