“Take It Apart and Put It Together Again”

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The Times Union reports another potential casualty of New York’s belt tightening:

Along with calling for a hiring freeze on all non-essential state positions to control state spending, Gov. David A. Paterson also said Monday that another target may be the popular school-tax-relief benefit known as STAR.

The program has been expanded in recent years to include annual rebate checks to homeowners, ranging from $250 to almost $900 per household.

Paterson didn’t offer specifics on how he would change the program, yet echoed sentiments from critics that since the program started in 1997, it hasn’t lowered school spending and ultimately led to higher taxes.

“The question is how effective has the STAR program been?” Paterson said during an interview on an Albany radio station. “Maybe there’s a different way to do it. Maybe we need to take it apart and put it back together again.”

A bit of history as seen through my obviously jaundiced eyes:

Governor Pataki made good on his campaign promise to cut state income taxes; he cut them and cut them again. And again. Local taxes rose to make up the difference. High income people benefitted, relatively, because rising property taxes were lower than savings in income taxes for higher incomes. The opposite was the case for middle incomes. So those of us in the middle wound up holding the bag.

After a couple of years of this, people just started getting wise to how the whole thing was working. But then Governor Pataki, in a political masterstroke, proposed property tax relief in the form of the STAR program. And the issue fell of the table.

Being off the table, people didn’t realize that the new STAR program favored wealthier areas of the state.

So maybe Governor Paterson is right. But what to do?

How about readjusting state income tax rates in a progressive direction, so that the state can raise aid to localities?


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