Albany Democrats? new budget deal includes higher taxes for those with higher incomes, which on Long Island amounts to about 120,000 families.

Gov. David Paterson says the tax is necessary to help close the $18 billion budget gap and that it will raise $4 billion in revenue for the state. Currently, all families making $40,000 or more annually pay a 6.85 percent state income tax. Under the new budget, households earning between $300,000 and $500,000 after deductions would pay 7.85 percent. Those earning more than $500,000 would pay 8.97 percent.

Dowling College economist Marty Cantor says hiking taxes on the wealthy is bad for attracting businesses to Long Island and keeping them there. He says it could further depress the local economy because as people have less disposable income, local governments will collect less money in sales tax revenues. That would then result in fewer jobs in industries Long Island residents spend money in, like retail, restaurants and entertainment.

Cantor says while raising taxes on the ?rich? isn?t the best solution, it?s better than cutting school aid or Medicaid payments.

According to a recent News 12 Long Island-Hofstra University poll, a majority of Long Island residents are in favor of boosting taxes for anyone making more than $250,000 a year. Opponents, however, say taxes on Long Island are already high enough.

Paterson and legislative leaders say the income tax hike would expire after three years. New state budget nixes STAR rebate checks