Streams

Legislators back in Albany this week as Cuomo lays out tax plan

Monday, December 05, 2011 - 09:48 AM

Courtesy of the Governor's office.

Last week the State Assembly announced it would be conferencing tomorrow as it prepared to come back into session. State Senate Republicans plan to return on Wednesday to, as Scott Reif, spokesperson for the Majority put it, "discuss a number of issues, including our commitment to cutting taxes to create new private sector jobs."

All this adds up to  the legislature likely starting a special session as the end of this week, and the agenda will likely be Governor Andrew Cuomo economic plan that will include major changes to how New Yorkers at various levels are taxed.

In an op-ed released over the weekend, the Governor offered a broad set of goals he said would "address the illness" facing the state's economy. The creation of a fund to help rebuild the state's infrastructure, the creation of "gaming locations" (you might know them as casinos) in New York State, and a targeted focus on urban youth employment issues were among the top of Cuomo's list of to-dos.

But what the legislature and Governor will likely be most focused on in the immediate future will be an overhaul of the tax code.

"[A]n effective way to stimulate the economy and promote job creation is through our tax system," Cuomo wrote. "We should pursue comprehensive reform of our tax code to make it fair, affordable and one that incentivizes economic growth."

According to the New York Times' Thomas Kaplan, Cuomo's administration wants to allow the so-called millionaires' tax expire at the end of the year, effectively keeping his promise not to extend the program. But that doesn't mean higher-income earners wouldn't see their taxes rise under the new proposal.

[O]ne or more new tax brackets for high-income earners would have those individuals paying less than they did under the surcharge — allowing officials to say that the millionaires’ tax had lapsed — but paying at a higher rate than they would have been under existing tax brackets. The proposal would also lower the tax rate for middle-income earners and might include tax incentives for businesses. It was not clear on Sunday what the income thresholds would be.

The officials, speaking on the condition of anonymity because the talks were private, said that if agreed upon, the new rates would last for several years; a commission would be created to come up with permanent new rates and to address tax loopholes and changes to business taxes.

The chatter around the anticipated move to overhaul the tax code suggested that Cuomo wouldn't come out with a proposal--even, presumably, through an anonymous source to the Times--if a deal hadn't been reached with Senate Republicans and Assembly Democrats in advance. Considering the state's facing a $350 million shortfall this year, and an estimated $3.5 billion one next year, finding a consensus--or avoiding Washington-style gridlock, as Cuomo's been calling it lately--that involves some sort of revenue increases may be unavoidable.

But Kaplan has Kathryn Wylde of the pro-business group Partnership for New York sounding like her constituency was supporting the Governor's plan:

“He knows it is possible to raise revenues without inflammatory rhetoric that drives business and wealth out of the state,” Ms. Wylde said.

There are things the Governor has left out of his end-of-the-year economic plan, as Jacob Gershman of the Wall Street Journal points out. These other issues--pension reform, the MTA payroll tax, and the livery car bill--look like they'll have to wait until the full session starts at the beginning of next year.

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Comments [1]

Larry Littlefield

The use of the word "reform" should be banned, particularly with regard to pensions.

Some years ago, the Cuomo/Sheldon Silver/Dean Skelos generation were promised a fairly lucrative pension in public service, typically retirement with half pay after 30 years at age 62.  But even as most non-rich workers had their retirement benefits taken away, the state passed one retroactive pension enrichment after another for themselves and their backers, with the cost described as zero and put off.

The game plan now is to provide future employees with a drastically worse pension than Generation Greed had been promised to begin with.  This would have no effect for years, and public services will be gutted because of Generation Greed's retroactively enriched pensions.  But the cuts for future public employees will allow them to feel justified in providing worse and worse public services as the nation's highest state and local tax burden, because "they" had "sacrificed."

This "screw the newbie, flee to Florida" cycle goes on and on, with no one talking about it. Pensions are retroactively enriched in irrevocable middle of the night deals, and then the pay and benefits of future public workers is cut due to "circumstances beyond our control."  It's a technical situation, see, so moral language is inappropriate.

Speaking of tax "fairness," how come a public employee can retire at 55 (or, for some, 45) and have their retirement income fully exemplted from state (and NYC) income taxes?  Paying nothing even as working people with lower incomes have to pay?  And how come no one, absolutely no one, will dare to bring this up?  Ever? 

You want to get a reaction.  How about writing a post on this in the context of Cuomo's tax "fairness" initiative. 

Based on my experience, you will probably have someone write in with the following lie -- taxing public employee pensions would be unfair because they paid state taxes on their pension contributions.  The pension contributions by New York's public employees are right down near zero -- far lower than public employees themselves have kicked in anywhere else in the U.S.  The massive taxpayer contribution -- now at 40% of payroll for NYC -- is not taxed.  More likely, your management will get a bunch of phone calls demanding that this not be brought up.

http://www.r8ny.com/blog/larry_littlefield/taxes_and_generational_equity_in_2008_the_latest_annual_analysis_of_the_issue_no_one_else_seems_to_want_t

From the state constitution:  "THE INCOME OF PUBLIC EMPLOYEES SHALL BE TAXABLE, except pensions."  Why doesn't it read "retired public employees don't have to pay taxes no matter how high taxes are on others, even those worse off"?  Perhaps that wouldn't have passed.

Dec. 05 2011 04:01 PM

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