How Fair Is New York’s “Fair Tax Plan?”

On December 7, New York enacted new personal income tax rates that take effect January 1, 2012. According to the Connecticut Mirror, some consider New York's “Fair Tax Plan” a model for Connecticut because it raises taxes on high earners while reducing tax rates for the middle class. On the other hand, ProPublica reports that the new law cuts tax rates for a high-income couple earning between $500,000 and $2 million by 2.12% while a middle class couple earning between $40,000 and $150,000 gets a cut of only 0.4%. (Rates for couples earning under $40,000 are unchanged.)
So, is New York's new plan a tax increase or a tax cut for the wealthy? Both, actually.

In 2009, facing a large projected budget deficit, New York imposed temporary surcharge on high earners. The surcharge expires after the 2011 tax year and, under the prior law, marginal rates in 2012 would have automatically reverted to 2008 levels. The Fair Tax Plan instead establishes top rates higher than they otherwise would have been, but also lower than they currently are (see below).

MARRIED FILING JOINTLY
New York Taxable Income		Tax Rate
Over	But Not Over	2011	2012 (Prior Law)	2012-14 (New Law)
$40,000	$150,000	6.85%	6.85%	6.45%
150,000	300,000	6.85%	6.85%	6.65%
300,000	500,000	7.85%	6.85%	6.85%
500,000	2,000,000	8.97%	6.85%	6.85%
Over $2,000,000		8.97%	6.85%	8.82%

Like the 2009-11 surcharge, the new plan is temporary and expires after 2014. In 2015, tax rates are once more scheduled to revert to 2008 levels and all married couples with New York taxable incomes over $40,000 will again pay a top marginal rate of 6.85%.