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NRO’s eye on debt and deficits . . . by Kevin D. Williamson.

Governor Cuomo Backslides



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New York’s fiscal situation is so dire that Gov. Andrew Cuomo was doing a pretty good Rick Perry impersonation there for a bit: cutting spending and generally behaving like a fiscal adult. Deroy Murdock voiced the pleasant surprise shared by many conservatives: “Cuomo’s performance thus far has advanced the cause of limited government in the Empire State far more than did his past three predecessors — the hapless David Paterson, the pantsless Elliot Spitzer, and the clueless Republican, George Elmer Pataki.”

Unhappily, that golden hour was not destined to last. Governor Cuomo is under pressure from union goons and other progressive groups, and probably from his own hereditary inclinations, to make the New York State tax code more “progressive,” meaning more redistributive and therefore more amenable to political manipulation. Rather than the current system, which applies a single rate to all taxable income — an arrangement that puts all taxpayers on the same side of the fight — the Left wants a graduated, class-warfare income tax. Putting taxpayers at odds with one another, rather than at odds with the tax-consumers, is a necessary step in the progressive divide-and-conquer campaign. And Governor Cuomo is obliging.

The deal being hammered out in Albany right now will be presented as an across-the-board tax cut for everybody in the state. And, technically, that’s true. The sneaky part is that the highest income group is currently paying a surcharge on top of the regular state income tax, and that surcharge was due to expire. Under the nascent deal, the top bracket will pay a lower effective tax rate than it is paying today, but not as low a rate as it would have had the surcharge simply expired. Basically, the surcharge has been reduced but made permanent.

As Capital Tonight puts it:

An overhaul of the state’s tax code will likely see five different brackets that will generate $1.9 billion in revenue for New York, a source with knowledge of the plan said.

The brackets under consideration are $40,000 and lower; $40,000 to $150,000; $150,000 to $300,000; $300,000 to $2 million and $2 million and higher.

There would be no change for those making less than $40,000, while the rate for those making $2 million and higher will decrease from 8.97 percent to 8.82 percent.

Those high earners would actually be in store for a larger cut if a surcharge is allowed to expire at the end of the month, but pushing this plan through now would allow lawmakers and Gov. Andrew Cuomo to claim they are slashing taxes for nearly everyone.

So, that’s a $2 billion tax increase, roughly, over current law — about half of what the progressives wanted.

Tax increases are not a categorical evil: Budgets have to be balanced, and spending has to be paid for. If you’re going to buy yourself an aircraft carrier, a highway, or a splendid little war in the Congo, you’re going to collect taxes to pay for it. What’s bothersome to me in this story isn’t the tax increase per se: It is first and foremost the revision of the tax code in a destructive way, and, secondarily, the fact that the additional revenue is going to be used not for essential and necessary services but for such Democrat-enrichment schemes as a stimulus-spending campaign and, as the New York Times puts it, “new programs to train poor urban youths,” i.e., using the unemployed to employ the unemployable through employment programs employing those who administer employment programs for the unemployed who are going to stay unemployed.

But long after the fiscal damage is done and the fruitless (at best) spending has been forgotten, the graduated tax system will remain as a cudgel in the hands of the political class.

Why should New York State have graduated income-tax brackets? Why should the country, for that matter? Here’s what Governor Cuomo has to say: “In New York under the permanent tax code, an individual making a taxable income of only $20,000 pays the same marginal tax rate as an individual making $20 million. It’s just not fair.” If Governor Cuomo were taking my writing course, I’d knock ten points off for question-begging. Why is a single rate inherently unfair?

A single rate is not only progressive, it is perfectly progressive: One’s income-tax liability is perfectly proportional to one’s income: At 10 percent, that means $10 on $100 in income, and $10 million on $100 million in income. Income taxes progress proportionally to income. What would be onerous would be a capitation tax, meaning that if government spending averages $25,000 per capita, then everybody owes $25,000 in taxes, regardless of income. (There is, in my view, an excellent moral case for precisely that kind of tax, but that’s an argument for another day.) Under a flat tax, if my income is 20 times yours, my tax liability is 20 times yours. I do not see how that is unfair, or why a tax liability 25 or 50 times as large would be more fair, or why the definition of “fair” necessitates that one’s tax liability be disproportionately increased relative to one’s income. Governor Cuomo has not made that case, probably because nobody ever has challenged him to do so. The “fairness” of graduated tax rates is just part of the intellectual weather, something that progressives present as though it required no argumentation or explanation. Conservatives should take the opportunity to force them to make the case — they’ll still get away with the robbery, of course, but maybe not the glibness.

Governor Cuomo deserves the thanks of his constituents for the good work he did in his first months in office, and he deserves the thanks of the nation for demonstrating the life expectancy of fiscal rectitude among Democratic governors: about the same the life expectancy of a robin, and there’s a long winter ahead before New York can expect to see another one of those.

—  Kevin D. Williamson is a deputy managing editor of National Review and author of The Politically Incorrect Guide to Socialism, published by Regnery. You can buy an autographed copy through National Review Online here.


Tags: Fiscal Armageddon , General Shenanigans , States , Taxes


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