Tuesday, August 3, 2010

New York Legislators Finalize Budget, Four Months Late by Danny Hakim- NYTimes.com

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Lawmakers finalized one of the latest budgets in New York State history on Tuesday night, passing legislation that will raise roughly $1 billion — in part by increasing taxes on the sale of clothing and on a variety of businesses, while sparing hedge fund employees from a proposed new tax.

The state will increase its share of revenue from video gambling machines and will allow a number of casinos in New York to stay open longer. Lawmakers also voted to reduce charitable deductions for those who make $10 million or more.

But lawmakers rejected a plan to enact a tax change on earnings by hedge fund managers who work in New York but live outside the state. Much of their compensation comes in performance incentives that are considered capital gains and are taxed federally at a rate of 15 percent. The change would have made these earnings “ordinary” income, subject to state tax rates.

The move came as hedge funds were being wooed to move out of state.

A vote in the State Senate took place just before 8:30 p.m., ending months of protracted and contentious negotiations, with the budget 125 days late. The Assembly had earlier approved the budget.

Democrats who control the Legislature feared suffering the indignity of passing the latest budget ever during an election year. The record was set in 2004, when the budget passed on August 11.