Greg David has sent us some of his concerns about the pushback from the left on the city's "austerity" budget: "After Mayor Michael Bloomberg announced he would reduce the city workforce by 11,000, the outcry was predictable, if sincere: such cuts would be devastating to New Yorkers. A similar refrain in Albany has meant paralysis as legislators refuse to cut spending by $5 billion as part of a plan to close a $9 billion budget gap. In the coming week or so, I will blog on the size of the city workforce, the complications in Mayor Bloomberg's rhetorical assault on Albany and the issue of what is affordable. Let's begin today with the alternative to the reductions in the budget--tax increases."
David believes that the story in the NY Times today, frames the debate quite well: "The mayor’s budget also does not contain any new taxes. But a group of liberal members of the City Council, echoing the populist anger that has swept through much of the country, suggested that the mayor impose taxes on hedge funds and stock traders. Melissa Mark-Viverito, a council member who represents East Harlem and parts of the Bronx and who is one of the leaders of the Council’s Progressive Caucus, dismissed the mayor’s budget as “trickle-down economics” and said it would do little to revive the economy."
Revive an economy, we might add-and David does as well-that has been rocked by the city's already already high tax, poor business climate. As David tells us: "The combined state and local tax burden in New York State is the highest in the nation in most years it is measured. When it is not No. 1, it is a close second to New Jersey or Connecticut. The city tax burden, because New York imposes so many unique taxes and because its city income tax is so steep, is 50% higher than the average of the other 10 largest cities in the nation.The adoption of a so-called millionaire's tax last year, which applied to many people who didn't make $1 million, raised the combined state and city income tax levy to 12.62%. (Full details in the High Tax Trap by E.J. McMahon). The income tax revenues generated my the millionaire's tax have fallen short of expectations, although it is impossible to know how to weight relocations and what role the weak economy played."
Interestingly enough, many of the same folks who are calling for more taxes on the wealthy are also sponsors of the Small Business Protection Act, a bill that seeks to ameliorate the catastrophic conditions for small business in NYC. But, as Steve Malanga has pointed out, it is the high tax and onerous regulatory regime here that has maimed the small business owner-fatally in so many cases. Imposing more taxes is never a limited phenomenon-and always ends up, in shot gun fashion, harming plenty of folks who are far less than filthy rich.
But, aside from the fact that raising taxes on folks who can pick up and leave is counterproductive, the effort to do so elides the more compelling need to reduce the size and scope of a government that is in constant need of additional revenue to sustain its insatiable appetite. This is the reality that makes Bloomberg's Blame Albany rant look like nothing other than that old pot and kettle analogy.