Taxes Are On New York’s Table

Taxes are a burden, of course. They are so by definition. Citizenship involves accepting the burdens and benefits of society — taxes being a primary “burden.” They are our contribution to the common good, and the common good is the compilation of the benefits.  

If you are in a position to pay taxes, count your blessings. You are getting the benefits, even if you begrudge the idea of others getting benefits you don’t.

The other day someone close to me loudly criticized the idea of the government helping out victims of the mortgage crisis: “I don’t see why they should get a handout; I don’t get anything from the government because I ‘make too much money!'” He was particularly incensed that his daughter didn’t qualify for a government grant for college because of his income. Oddly enough, this person has a municipal job (yes, he’s paid 100% by other people’s taxes!) and belongs to a union. My thought is, if his income actually were low enough that she did qualify, then he and his fellow workers ought to find a better union!

I can think of only two questions we should ask about taxes: are they spent well and are they collected fairly? The former question is the perennial question that makes politics fun. The latter has to do with a range of issues, including tax rates.

As far as tax rates go, New York State has not collected taxes fairly in a long time. Starting with 1987, when Assembly Speaker Mel Miller trumped the Senate’s annual call for tax cuts with a whopping proposal of his own, New York State has had a chronic case of tax cut fever, with the exception of a temporary (and since expired) surcharge on upper incomes passed in 2003. The upshot is a virtual flat tax. Check this out:

New York collects state income taxes using a progressive, five-bracket system.

For single taxpayers:
— 4 percent on the first $8,000 of taxable income.
— 4.5 percent on taxable income between $8,001 and $11,000.
— 5.25 percent on taxable income between $11,001 and $13,000.
— 5.9 percent on taxable income between $13,001 and $20,000.
— 6.85 percent on taxable income of $20,001 and above.

For married persons filing joint returns, the rates remain the same but the income brackets are doubled.

$20,001 a year taxable income gets you into the top bracket? Who knew $10 an hour (give or take) was such a big-time wage that it would put you into the top bracket? It isn’t, of course. That’s the problem.  That nice person at the cash register taking all that guff from customers should not pay the same tax rate as the person who owns the store. But she does.

It must be especially galling when her local taxes go up because New York State faces yet another fiscal shortfall and leaders in Albany swear they will not “raise taxes.” Is there no one to stand against this madness? Well, there may be.

With the economy weakening and tax collections slowing, members of the State Assembly are discussing a plan that would raise income taxes on the wealthiest 3 to 4 percent of New Yorkers…

Discussion of the plan is still in the early stages, but its basic elements already have the backing of Sheldon Silver, the Assembly speaker, and of Assembly Democrats who represent some of the wealthiest parts of the state…

The plan has two major elements. The first would raise income taxes on households with income above $250,000. While the proposal offers options for the size of the increase, under one option, the household would be taxed an extra percentage point on income it earns above $250,000. Currently that income is taxed at a rate of 6.85 percent.

The additional tax rate would gradually increase, to two percentage points on income over $500,000 and three points on income over $1 million.

Roughly half of the revenues would be used to pay for a property tax rebate for most homeowners in the state, and the rest would be used to pay for the state’s operations.

My complaint is that the proposal still leaves a huge bracket — between $20,001 and $250,000. Yet it’s a good start. Not that we should expect this to sail through negotiations:

The plan is sure to meet opposition in the Republican-controlled State Senate. On Tuesday, the Senate majority leader, Joseph L. Bruno, reiterated his opposition to any new taxes. The emergence of the tax increase measure may also reinforce claims by Republicans that Democrats will raise taxes if they gain control of the Senate in the November elections.

And Gov. Eliot Spitzer has come out strongly against a tax increase as part of next year’s budget. But as the economic outlook clouds, the governor and the Legislature face limited options. On Tuesday, Mr. Spitzer’s budget director, Laura L. Anglin, repeated the administration’s objections to a tax rise, but she did not rule one out entirely.

A crack in the door is better than a door slammed shut. Needless to say, expect the naysayers to come out in force:

But E. J. McMahon, the director of the Empire Center for New York State Policy, a division of the conservative-leaning Manhattan Institute, said it was misleading to compare the 2003 tax increase with this proposal, because that measure came at the same time that federal income taxes were reduced on upper-income people.

“There’s nothing like raising taxes when you’re entering a recession,” he said. “The timing couldn’t be worse.”

Uh huh. 2003 was OK because the rich were pre-coddled by Bush tax cuts. And in a recession, according to Mr. McMahon, those who are most likely to be clobbered and who rely most on the benefits of society — low and middle income workers — should just, well, get clobbered.

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