By JOSEPH SPECTOR
Albany Bureau Chief
ALBANY -- The number of New York tax filers earning more than $1 million a year dropped 22 percent in 2009 during the depth of the recession, statistics from the state Department of Taxation and Finance show.
See a database of wealthy taxpayers in New York from 2009
Overall, New Yorkers earning more than $200,000 in adjusted gross income fell 8 percent between 2008 and 2009, a drop from 321,174 filers to 294,287 filers. The state had 8,064 fewer millionaire filers in 2009 than in 2008, falling from 35,908 to 27,844, the records analyzed by Gannett's Albany Bureau showed.
Manhattan had the most millionaire filers, a total of 12,415 in 2009 - a decline of 24 percent from 2008. Westchester County had the second most at 5,145 filers in 2009, down 1,510 from 2008 and a drop of 23 percent.
Upstate also saw its share in the decline of high-income earners during the recession, which officially ran from December 2007 through June 2009.
Outside the New York City area, Monroe County had the largest number of tax filers whose income fell below $200,000 in 2009. The number fell by 737, down to 7,167 filers overall, or a drop of 9 percent.
In Dutchess County, the number of millionaires fell 33 percent, among the largest percent drop offs in the state. The number of millionaire filers fell from 198 to 132.
Some fiscal analyses show that since 2009, the wealthy have rebounded. Education groups and unions said higher incomes taxes on the rich should continue in New York. Business groups said the state's income-tax data shows that the higher taxes should expire.
The records include both individual filers and married couples filing jointly. The 2009 data, provided to Gannett this week, is the most recent available because it takes the tax department more than a year to complete all tax returns and extensions.
The statewide data shows how the recession and its ongoing effects hit New York along with the rest of the country. According to the IRS, the number of filers nationally that earned more than $1 million in 2009 was down 26 percent compared to 2008.
The decline in the wealthy in 2009 hurt New York's tax revenue amid major budget gaps in recent years. The records show that among high earners, New York collected about $435 million less in income taxes in 2009 than it did in 2008, a decline of nearly 3 percent.
The numbers come as unions and education groups push for New York to retain high income taxes on the wealthy next year. Implemented in 2009, the high tax rates on those earning more than $200,000 are set to expire Dec. 31, a loss of at least $4 billion a year in tax revenue to the state.
Gov. Andrew Cuomo and the Republican-led state Senate have vowed to let the tax expire, even as groups rally around the Occupy Wall Street movement and call on Cuomo to extend the tax. The groups have held rallies around the state this week to urge Cuomo and state lawmakers to continue the tax.
A Siena poll Monday showed that 72 percent of New York residents approved extending the tax.
Some leaders of the movement, called "99 New York," debunked the decline of millionaires in 2009, saying other statistics and the state's own estimates show that incomes for the rich have grown since then.
"2008 and 2009 were both years when there was a decline in the number of high-income returns both nationally and in New York. And in 2010, the recovery began," said Frank Mauro, executive director of the labor-backed Fiscal Policy Institute based in Albany.
Mauro pointed to statistics from the U.S. Commerce Department's Bureau of Economic Analysis that showed New York had the fourth highest growth in earnings in the country in 2010.
A report last month from the Phoenix Affluent Marketing Service, a marketing firm based in Rhinebeck, Dutchess County, found that after two years of declines, households with $1 million or more in investments or liquid assets grew 8 percent in 2010, numbering about 5.6 million households.
In New York, the group's data showed that millionaire households rose 10 percent between 2009 and 2010, from 345,892 to 381,197.
Also, state budget projections show an upward trend in income-tax revenue from the wealthy. The yield from higher income taxes on the wealthy is expected to jump 10 percent between the 2010 and 2011 tax years, from nearly $4.9 billion to about $5.4 billion, Mauro said.
The groups said the higher income-tax rates should continue because statistics show the rich have benefited since the economic downturn in 2008 and 2009, while others continue to struggle. They said the higher rates increase income taxes by about 1 percent, and there are about 29,000 millionaires who work in New York but live in other states that weren't include in the 2009 tax data.
"The wealthiest continue to do quite well in our society, despite the recession," said Ron Deutsch, executive director of the labor-backed New Yorkers for Fiscal Fairness.
In a report last week, Comptroller Thomas DiNapoli offered a weak outlook for Wall Street and predicted cash bonuses would likely to be smaller in 2011 for the second straight year.
Nonetheless, the average salary in the securities industry in 2010 grew by 16.1 percent to $361,330, 5.5 times higher than the average salary in the private sector of $66,120, DiNapoli said in the report. Wall Street accounts for about 14 percent of the state's tax revenues.
In 2009, state leaders adopted two higher tax rates on the wealthy to combat a roughly $17 billion budget gap. The rates increased from 6.85 percent to 7.85 percent for those earning between $200,000 and $500,000 and to 8.97 percent for those with taxable income in excess of $500,000.
Business groups have urged lawmakers to let the tax expire and said keeping it would hurt the state's economic climate.
The business groups said that the decline in the wealthy in 2009 was the result of the economic downturn but also blamed it on the higher income tax rates, suggesting it could have led people to leave New York.
The 2009 tax data is "not surprising," said Mike Durant, New York director of National Federation of Independent Business. "It's an indictment of the business and tax climate in the state."
A report from the conservative Empire Center for New York State Policy last month showed that about 1.2 million people left New York to other states between 2000 and 2009.
The income tax filings also include small business owners, said Brian Sampson, executive director of Unshackle Upstate, a Rochester-based business group. So the decline in wealthy New Yorkers in 2009 also hit small employers, he said.
While advocates want to keep higher taxes on the rich, Sampson said, "what they're doing is targeting the true growth sector in our economy -- and that's small business. Passing a millionaires' tax puts New York at a competitive disadvantage to our neighboring states."