Streams

Cuomo and New York's Business

Wednesday, January 05, 2011

The newly elected Governor Andrew Cuomo (Karen Frillman)

Welcome to Politics Bites, where every afternoon at It's a Free Country, we bring you the unmissable quotes from the morning's political conversations on WNYC. Today on The Brian Lehrer Show, Kathryn Wylde, president and CEO of the Partnership for New York City and Steven Spinola, president of the Real Estate Board of New York—both members of the business-centric Committee to Save New York—offered their perspectives on how Governor Cuomo's fiscal policies will impact New York State.

If Kathryn Wylde and Steven Spinola are any indication, New York's business community is optimistic about spending a few years with Governor Andrew Cuomo.

Welcome are the promises to freeze taxes for everyone and to let a tax surcharge on the wealthy New Yorkers sunset at the end of 2011. Spinola and Wylde also voiced support for public employee wage freezes and other cost-cutting measures, insisting that getting government spending under control is the best thing Andrew Cuomo can do for the state's economy. Spinola said that we've gone about budgeting all wrong in previous years.

He's spoken about the need for the business community and citizens to speak up about their fears about where the state's fiscal problems are going, where taxes are going, and where our debt is going. The governor is articulating exactly what we've been aruging for the past year or two. In the crisis we've had, instead of raising the budget by $9 billion in a year, we should've cut the budget. Last year we raised it again. We should not have done that. Cuomo is now articulating the reality that we cannot afford to spend beyond our means.

The government—and the state's residents—are in for some sacrifices. But Wylde said she agreed with Cuomo that this crisis is not to be wasted. New York's problems are far greater than any one constituency, and Albany has been routinely flooded with special interest groups advocating for too-specific policies that don't necessarily work. This could be a chance for the new governor to shift focus to the holistic picture of the state, using big problems to bring disparate groups into the conversation.

Business spends plenty of money focused on narrow industry interests. Same with organized labor and other special interest groups, they tend to focus narrowly. The challenge Cuomo will lay out today in his message is, "Okay, enough with your narrow interests. The whole place is falling apart. There is no more resource. The state can't support any of you unless we fix what's going on, unless we figure out how to grow our economy in a constructive way, get control of the taxes and that we grow our tax base by building our economy, not simply by raising taxes."

Whether or not it's the right thing to do, Cuomo will have to explain to many New Yorkers earning between $200,000 and $500,000 will see their taxes go down at the end of the year, while everyone else's rates stay the same and government services tighten their belts. Brian Lehrer played devil's advocate, asking Wylde and Spinola if it's fair for the individuals and corporations that contributed to the financial collapse in 2008 to get a tax cut when everyone is struggling. Wylde said that was an oversimplification of the causes and effects of the crisis, and responded that the recession's effect on New York was comparatively small. The real problem for New York is the pattern of overspending that the state had gotten used to in the last 15 years.

If you look at the trajectory of state spending growth and debt, as opposed to state revenues, this is a long-term structurual problem that's been happening over the last decade and a half. This is not a result of the financial crisis and immediate recession. [The financial collapse] is a blip on the screen compared to the overall problem the state faces in its costs, where our Medicaid costs are double the country average, education costs are double the country average, and that has to do with growing our expenses far more than growing our economy...The public sector has, at the state and local level, displaced the private sector as a source of jobs and economic activity.

Spinola agreed that scapegoating big business and the rich with higher taxes places all the blame on very few people. For more substantial causes of our economic woes, he said, look no further than the public sector.

It wasn't the real estate industry or the banking industry that negotiated pensions we can't afford. It wasn't the real estate industry or the banking industry that negotiated wages that continue to get increase in the last couple years despite the fact that the private sector wasn't giving increases. 

Brian brought up his thoroughly unscientific poll for today, which finds that a vast majority of respondents think the tax surcharge for higher-earners should not be allowed to expire at the end of the year. Public opinion, he pointed out, may not be on Wylde and Spinola's side. Spinola countered that if the question were phrased differently, expressing the full range of ramifications for raising taxes, we might see very different results.

If you ask your listeners would they support taxes on the rich if it also might mean that those people will make a decision to move out, and the number won't generate as much money, or that investments won't be made in the state of New York and jobs may be lost or won't be created, you might get a little different response. The thought process has to go a lot deeper than "Should we tax rich people?"

As with most of Governor Cuomo's actions thus far, the symbolism of his tax decisions will be important. Wylde said that letting the tax surcharge sunset was a promise made by the government years ago, and that the state risks more by reneging than it does by lowering taxes. It's all about perception and confidence. If people can't keep faith in their government's promises, New York's problems will only get worse.

If the state breaks its word to the taxpayers, then i think you're going to see an acceleration of the people who are leaving New York. Property and income tax burdens are starting to be a decision-maker, not just for individuals, families and young people, but also for businesses. We have to change the message New York state is sending if we're going to be competitive.

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Comments [33]

sadie from washington heights

By the way, regarding rich people leaving NY:

#1) In Switzerland, income tax rates are much more progressive than here (don't have exact nos. offhand).

#2) There is no salary cap (as there is here) for paying tax into their Social security system. Entitlement payments out of social security are progressively scaled so that high-earners receive less or nothing, while low-earners receive more.

#3) Also they tax capital! Meaning bank accounts, investment accounts, etc. Tax is moderate (less than 1% I think), but it is a tax on wealth, not just income (interest and dividends) from wealth.

Are the Swiss leaving their country in droves? I don't think so.

Jan. 05 2011 11:19 AM
sadie from washington heights

NYS tax rates tell the whole story:

If your taxable income is $41k, your state tax will cost you 4.9%

If taxable income is $300,0000, state tax will cost you 6.6%.

$500,000? You'll pay 7.1%.

$10,000,000? You'll pay 8.9%.

So someone earning $10 million pays 4% more of their income than someone earning $41k.

Jan. 05 2011 11:05 AM
Margaret Groarke from Bronx

We New Yorkers hear way too much of what K.Wylde and S.Spinola think should happen, and its always the same -- cut taxes, especially for the rich. Spinola even referred to the people subject to the surcharge as "supposedly rich" -- does he realize what a small percentage of New Yorkers earn $250,000?
Signed,
Not one of them

Jan. 05 2011 11:01 AM
Taher from Croton on Hudson

Linda E. From Manhattan. I hear you. You can’t wait to live in a New York where you have to bribe a public employee to get a document, erase parking a ticket-for the right cash. Yes, I’ve lived in countries where public employees at various government offices had to be given cash to get anything done.
Why? Because they are not have a living salary, health cares coverage and so on.
Bring it on Linda E. From Manhattan. I can’t wait to see you in line down town with fist full of money.

Jan. 05 2011 10:56 AM

rich people don't pay taxes anyway. that's what accountants are paid for!

Jan. 05 2011 10:54 AM

SuzanneNYC
it's all smoke are mirrors

Jan. 05 2011 10:54 AM
LF

Sounds like the usual- cut school funding and services all of which do not touch the rich who consume all the best of NY ( enormous climate controlled dwellings, send their children to expensive private schools, etc.) RE interests- Buy Stuyvesant Town and kick out the lower income residents. Get rid of any building oversight (which doesnt exist anyway)- we had to leave NY because the building dept allowed a new very expensive residential coop to build in front of our only 2 windows which allowed light in..We are teachers- Human dignity? Save NY? Manhattan is already a playground island for the rich replete with a moat around it. Committee to "save NY" hasnt finished yet? Chuck Parsons ( Citigroup), Tishman Speyer , really? Havent reaped enough profit?

Jan. 05 2011 10:52 AM
Phil from People's Republic of Park Slope

A: If such a large percentage of tax revenues comes from rich people, then the rates obviously aren't chasing them away. As soon as real estate prices of park avenue start falling, I'll believe that wealthy people are leaving the city.

B: The connection between the presence of wealthy people and creation of local jobs is spurious. Plenty of wealthy people create jobs overseas, and plenty of people in Connecticut and Florida and Europe employ people in New York.

C: Why not make the argument the wealthy people spend a smaller percentage of their income than middle class and working class people, so therefore the actual job creators are the middle and working classes who feed their income back into the economy rather than hoarding it.

Jan. 05 2011 10:52 AM

Jim from Greenpoint: The rich aren't leaving because of taxes. If that was the case, there'd be no millionaires in NY. The only people leaving are the middle class because they are being priced out by the millionaire class.

Jan. 05 2011 10:51 AM
Mr. Bad from NYC

OMFG - CUT THE CR#P!

Rich people pay more in taxes because they have so much friggin' money and are still getting richer while everyone else is broke - THEY HAVE OUR MONEY! A loaf of bread is still $1.99, if the rich want to start paying a multiple percentage of THEIR income for the basic human essentials of food,shelter,clothing etc. Than we can have a flat tax for everyone - no problem! Well why not you plutocratic morons? Your arguments are idiotic. That way a car built by wage slaves and financed by public debt will cost them a % of their income that it would cost for someone on the poverty line. How would you like to pay $330,000 for your basic lux sedan? You rich jerks are LUCKY you're only paying with your money now - see how far that attitude takes you when it really hits the fan in the coming decade LOL

Jan. 05 2011 10:51 AM
Mark Hannay from East Village

Trusting the top 200 CEOs in NY and the real estate industry to solve our state's economic crisis is putting the fox in charge of the hen house.

Jan. 05 2011 10:50 AM

Martin
"nanny state that my Democratic officials created"
or
the trillion dollar republicat war machine

which is worse?

Jan. 05 2011 10:50 AM
Lynn

My family stands to have our taxes go up, and do NOT mind it the least. Not going anywhere. I have NEVER seen any evidence provided that this drives people out. Cut or freeze spending. Yes. Raise revenues with those best able to weather it, (folks like me).

Jan. 05 2011 10:48 AM

Since this surcharge is to expire -- why haven't these rich people moved out of NY State already? And where where where is the evidence that people with lots of money create jobs. The Bush tax cuts didn't create jobs -- or at least prevent the economic meltdown. I want proof -- real numbers -- from anyone claiming that lowering taxes on the rich creates jobs as opposed to public sector stimulus spending. How many, where, what kind. Reality please not fantasy!

Jan. 05 2011 10:47 AM
Peg

We keep hearing the TAX share (40%) of the wealthy in NY. What is their relative INCOME share?

Jan. 05 2011 10:46 AM
Katie from Huntington, NY

Excuse me, but that's bullpeppy. The rich are not going to move anywhere; it is simply a threat. They are greedy, greedy, greedy. The only other time in our history where the balance of rich vs. poor was so high in favor of the rich was in 1929. The government basically collapsed. The rich paid higher taxes in the Clinton administration and we were'nt doing so bad then.

Jan. 05 2011 10:46 AM
Megan from Brooklyn

To Kathryn Wylde on your show today, why was the bailout to the rich a "bailout of the system" with our tax dollars, while aid to the poor is not also a "bailout of the system". Many of us liberals see the poor as the fallout of a lousy economic system that punishes the lower class, the mentally ill, etc.... And we see them as deserving of support, particularly from those who benefit most from the system.

Jan. 05 2011 10:45 AM

who says people are leaving because of high taxes?
do people want less services?
maybe the people moving are retired (let them go and spend someone else’s medicare taxes) maybe people leave for jobs (the upstate economy is dead )

and weren't public workers salary's decided during contract negotiations

Jan. 05 2011 10:45 AM
C.E. Connelly from Manhattan

Brian, please, I'm so sick of hearing that the rich will leave New York. I've never seen any studies suggesting that this is really happening. Please ask what the guests on which data they're making that assertion. In the last three days I've heard the claim made at least 10 times in the last three days.

Jan. 05 2011 10:45 AM
Jim from greenpoint

can anyone give me examples, concrete and at least a few, of these people that are leaving new york because of the taxes? It's said a lot and I'm willing to believe it, but I haven't been given any evidence.

Jan. 05 2011 10:43 AM

Again, as I stated yesterday, the issue isn't how much taxes the rich are paying. The problem is that the rich aren't hiring and/or paying the working class. The rich wouldn't be so heavily taxed if they'd paid salary to more people.

Jan. 05 2011 10:42 AM

Lost from much of this discussion is that our crippling debt servicing and deficits is due in part to failing to do anything other than cut taxes and borrow more money to pay for that which we insist is the proper function of a modern state. We constantly insist there is some kind of magical middle-ground (#nolabels!) alternative for actually paying for highways, subways, medicare, etc.

It's not that we can't afford this stuff, it's that most of us on the bottom of the totem pole pay a whole lot more of our income in taxes than the millionaires do, and it's always us who are asked to sacrifice. But who owes the most, hm? Can you say bailout?

The banksters need to pay, they've made record incomes this year while the rest of new yorkers lost their jobs.

Jan. 05 2011 10:40 AM
Mary Madsen from Brooklyn

Please ask the callers if they have frozen their own salaries. Make no mistake, these people are only concerned about their own incomes and their own bottom lines. They are not concerned about the citizens of New York

Jan. 05 2011 10:40 AM
tom from astoria

We had a small business right next door to the Chelsea Hotel. Our rent went up freom 4500 dollars to 10,000 when the lease ran out. Real Estate and developers are in no position to preach to a people in economic crisis. They push out small businesses and gobble up whole city blocks for their ambitious desires -- they cause crisises in families and small businesses who can no longer afford their rents.

Jan. 05 2011 10:40 AM
Helen Northmore from New York

A little perspective on the temporary income tax surcharge:

438,000 New York households (6.1%) have an annual income over $200,000.

The rest, 6,747,000 New York households, have an annual income under $200,000 a year.

88.5% of all New York households have an annual income under $149,000 a year.

Half of all New York households have an annual income of $54,559 or less.

5.8% of workers are in the construction trades.

Source US Census: http://factfinder.census.gov/servlet/DatasetMainPageServlet?_program=ACS&_submenuId=&_lang=en&_ts=

Jan. 05 2011 10:38 AM
Susan from NYC

Abolish all authorities there are more than 700)--they are nothing but unaccountable sincures for the incompetent donors and friends of the pols, sucking up tax money for their own benefit.

Jan. 05 2011 10:35 AM

Martin, I agree, "tax the rich" is exactly what I mean. We created a massive state of corporate welfare, and also an impressive social safety net, and amazing public infrastructure. You want to keep it? Gotta pay for it.

You can't keep carrying on about tax cuts and tax cuts if you're serious about balancing the budget and keeping this place from falling apart. It's an un-serious position, if you will.

Big money and big business needs NY, and if it falls, you will, too. You wanna go Galt? Be our guest. CT is lovely if you like living in the middle of nowhere.

Jan. 05 2011 10:34 AM
Chris Garvey from Amityville

I can't find the poll, but I know a few millionaires who lived in NY. They presently live in Florida, Singapore, Belize.
Non-millionaire pensioners are in Florida & the Carolinas.
The NY State income tax is a major factor for all.
NY real estate taxes are another factor.
Rich people can move more easily than poor.
You can fleece a sheep every year. You can only skin it once.

Jan. 05 2011 10:33 AM
Martin Chuzzlewit from Manhattan

"Tax the rich" is what so-called progressives say when they really mean..... "I don't want to address the massive, unaffordable nanny state that my Democratic officials created".

We could tax the rich at 100% and still not pay off the mess that we are in (and exacerbating month by month).

Jan. 05 2011 10:30 AM
Linda E. from Manhattan

thank god for this group. the public employee unions really need to be broken up in this state. it has made all of our services completely unaffordable thanks to the cabal between them and our past politicians -- including Bloomberg!

Jan. 05 2011 10:30 AM
Mary Madsen from Brooklyn

Did I just hear you say, Cuomo wants to let the tax surcharge on the rich in NYS expire???? Are the rich people suffering? Not as far as I can tell. Will the poor people suffer when programs funded by these taxes are cut? The answer is yes. Unbelievable that this would even be on the table. Why don't people understand that helping the poor helps everyone?

Jan. 05 2011 10:26 AM
brendan

I think the highest earners (i am one) have gotten quite enough tax relief from the Feds in these past few years. Given the horrible income iin-equality we are engendering, AND the State's terrible--mostly self-inflicted, i admit--fiscal situation, there is no reasonable choice but to maintain at least a semblance of higher tax rates at the top levels.
we should remember that even if all the 'temporary' tax relief--federal and state-- would be reversed, the total tax rates at the top levels would still be well below what they were for the last half of the last century, when we enjoyed truly healthy economic growth, and a general increase in quality of life for all income levels.

Jan. 05 2011 10:22 AM
gary from queens

I hope the guests will discuss the anticipated tax or fee increases, and spending cuts facing new yorkers, and the effect that will have on businesses staying on NY and new start ups. To wit:

Study suggests massive unfunded mandate: retiree health benefits
Wednesday, October 13, 2010
By Fred Mogul

Government retirees have been promised more than 200 billion dollars worth of health benefits, and but state and local governments have set aside no money to pay for them, according to a report by the Empire Center for New York State Policy, a conservative think tank.

MORE:
http://www.wnyc.org/articles/wnyc-news/2010/oct/13/study-suggests-massive-unfunded-mandate-retiree-health-benefits/

Jan. 05 2011 10:13 AM

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