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The Empire

Three reasons Cuomo won't back down on the millionaires' tax (and one reason he might)

Update at the bottom.

Courtesy of the Governor's office.

It’s possibly the biggest issue facing Governor Andrew Cuomo heading into the next legislative session: the so-called “millionaires’” tax. Cuomo has held his ground against a growing chorus—including the leader of the Assembly, Speaker Sheldon Silver—that’s making the Governor’s opposition a real issue. The Occupation movement has changed everything, pitting the Democratic governor against protesters who are backed by major public support for extending the tax.

But there are three good reasons why Cuomo won’t back down—and a big one that could change his mind.

#1 – He said he wouldn’t

This might sound like a no-brainer, but the issue has put the governor into a position where caving at this point emboldens political opponents. Take the Working Families Party. They’ve now put Cuomo in the cross hairs over the issue. The Governor nearly eviscerated the entire party when he flirted with not taking their ballot line last year, which would have deprived them of a top-tier candidate able to pull the 50,000 votes needed to secure said line.

Giving in now would invert the power relationship—not something that helps a governor who has made getting union concessions a mission. The same can be said for the Senate Republicans (he needs their help in the upcoming budget battle) and even Occupy Albany (does he cave to the next set of protesters to march on the capitol building?). The Governor has a tentative hold on order in Albany, and sticking with this issue, for now, keeps things intact.

#2 – The “strain on business” argument makes sense

Yes, proponents of the measure have pointed to the possibly fallacious argument that higher taxes drive people and businesses out of the state. But this isn’t just about wealth voting with its feet. It’s about a governor in the midst of a battle to change both internal and external assumptions and expectations about New York’s poor business climate.

Cuomo’s regional economic council plan is about more than just the $1 billion in incentives and cash for the winning region. It’s part of a larger goal of changing the dynamics between business, labor and government to achieve economic growth. Cuomo wants to be the governor who small and large business owners can trust. Flipping the script on the millionaires’ tax would jeopardize this, and make it easy for people to write him off as another anti-business New York Democrat.

Which brings us to…

#3 – 2016

It is an open secret that Governor Cuomo has presidential aspirations in 2016. It’s not the only principle that guides the Governor’s actions, but many decisions coming out of his office can be seen through this lens. To this end, there are stances that help the Governor with voters outside of New York State. This is one of them.

Cuomo has to fight the preconception that, as a Democratic governor of a heavily Democratic state, he is, among other things, anti-business/pro-tax. Last year’s budget closed a $10 billion-plus gap without raising taxes (the millionaires’ tax came out of the previous budget). Keeping his word this year means back-to-back budgets that defy anyone to call him a tax-and-spend liberal. This plays well with Blue Dog Dem-types in the Midwest and South—people the Governor will need from the primary through the general election if he’s going to make it to the White House.

Evolution

These thoughts have surely been on the Governor’s mind as he’s staked his position against the millionaires’ tax. Despite all this, there’s a big reason we could see some sort of upper income tax in the next budget: (r)evolution.

The Occupy Albany and Occupy Wall Street protests have turned the national conversation on taxes and budgets around 180 degrees. It was cut, cut, cut—period. Now it’s a more nuanced conversation about sharing of the fiscal pain. Governor Cuomo’s message is from the cut, cut, cut days. He might be forced—and even potentially want—to make the leap.

Right now the Governor enjoys unparalleled support among voters—72 percent in the latest Siena Poll. Support for the millionaires’ tax isn’t far behind at 61 percent, according to a recent Marist Poll. The Governor has the luxury of saying he doesn’t need to listen to the polls, but if he starts to see a slip in his numbers and can trace it to his stance on taxes, we could see a shift.

The narrative has also been slipping out of the Governor’s control. Opposition to his position is growing, especially in his own party. This, too, could help affect his numbers among Democrats, but more importantly it affects the Governor’s working relationship with legislators, and beyond that, his image. The stakes are being raised by pockets of dissent, not least of which is the growing concerns raised by minority lawmakers. If support on his left shrinks faster than support on his right, it could be enough to bring him around.

Any of these reasons could have led to the rumors in Albany that the Governor is looking for a way to pivot on this issue. It could also just be that he actually wants to be able to say yes, but can’t if it means looking like he’s backing down. This is perhaps the most crucial point of all: the only way Cuomo can change on this is if it looks like he’s evolving—not flip flopping—on the issue. For this to happen a new piece needs to come into play: a game changer that allows for the narrative to move back in the Governor’s favor.

What that might be isn’t entirely clear. Maybe it’s a new economic report. Maybe a surprise legislative partner appears who can pave the way. Whatever it is, if state legislators and groups advocating for a tax on upper income earners are interested in more than street protests and grandstanding press releases, you can bet they’re on the lookout. Otherwise, you can expect the Governor to stick to his guns, for better or worse.

[UPDATE: Liz Benjamin has a post up on State of Politics about one idea that might give the Governor a little daylight: reform the entire tax code.]