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New York to raise taxes on the rich. Is it a blueprint for Congress?

Bipartisan leaders in New York State agreed to a plan to raise taxes on the rich. The plan is broadly similar to similar ideas discussed – but rejected – by Congress.

New York Gov. Andrew Cuomo leaves the Capitol in Albany, NY, on Tuesday. Cuomo and legislative leaders agreed to income tax cuts for New Yorkers making $40,000 to $300,000, which will save most middle-class families $300 to $400 a year. The tax cut of a fraction of 1 percentage point will be funded by an increase in the rate for taxpayers making more than $2 million a year.

Mike Groll/AP

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In the state that's home to Wall Street, taxes on the rich are about to go up.

That's the hot-button headline from a budget deal announced Tuesday by bipartisan leaders in New York State.

The plan can be viewed in some ways as a microcosm of the larger debate in Washington over national finances. In both cases, a Democratic chief executive and a divided legislature face difficult budget deficits, a still-weak economy, and a public that doesn't want to see taxes go up.

A difference: New York politicians found a path of bipartisan compromise, including plans to collect some new tax revenue – from the state's highest earners – as well as to cut spending. In Washington, efforts to reach such an accord have failed so far.

"Our state government has come together in a bipartisan manner to create jobs, grow our economy and, at the same time enact a fair tax plan that cuts taxes for the middle class," Gov. Andrew Cuomo (D) said in a statement announcing the budget deal. "This would be lowest tax rate for middle class families in 58 years."

Of course, politicians are prone to spin their achievements in the most positive light, and it remains to be seen whether a deal designed to raise $2 billion in new tax revenue will simultaneously mend the budget and invigorate economic activity in New York.

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