Tuesday, December 16, 2008

Ideological Budget Battle

It looks as if there will be a real battle shaping up over the resolution of NY State's budget shortfall. As Liz B reports, the Working Families Party is gearing up to try to get the state to enact it's millionaire tax: "WFP Executive Director Dan Cantor said today he's "perplexed" by the information released to date about Gov. David Paterson's 2009-2010 budget, which includes $4 billion worth of tax and fee increases but not the so-called millionaire's tax long championed by the labor-backed party (among others)."

Of course, the so-called millionaire's tax has an extremely expansive definition-in essence a slippery slope that ensnares thousands of tax payers who aren't in the very wealth category. Here's EJ McMahon's view: "Supporters of an income tax increase in New York State were, until recently, pushing what they called a “millionaire tax.” But now that the number of millionaires is rapidly shrinking, Albany’s most vocal tax-hike proponents have lowered their taxation target to households with incomes over $200,000, judging from a poll reportedly released by the union-dominated Working Families Party (WFP) last week..."

And, as McMahon points out, if the decision was done by referendum, the result would be predictable-after all, as long as it's the other guy, folks don't mind a tax hike: "So if the Legislature and Governor Paterson are guided by public opinion in closing a $15 billion two-year budget hole, they will reduce government spending a little and raise income taxes a lot on New York’s most productive and mobile households. And then, presumably, they’ll join everyone else in a race for the exits as the state economy sinks even further."

But long term consequences to the economy is not something that bothers the WFP; and the party has a skewed vision on who's actually shouldering the tax burden: "Cantor noted that a number of Paterson's proposals, such doing away with the exemption of sales tax on clothing up to $115 and a new "obesity tax" on non-diet soda would likely hit people of modest-to-little means particularly hard, while not really having much of effect on the rich. "There's a lot of people being taxes, just not the wealthy," Cantor said. "It's not reasonable to only ask the middle class and poor people to contribute. Real shared sacrifice has not yet become part of the governor's proposal."

Maybe, Cantor should examine the overall tax burden that all New Yorkers suffer from; and just where the State of New York ranks in this category. The WFP's core belief, however, is that your money belongs to the state: "It's contradictory for the governor. You know, he's got some good things in there. The Empire Zone restructuring seems entirely sensible, and the expansion of the social safety net is a good idea. But the unwillingness to ask the top three or four percent to pay a bit more in taxes since they gained so much more in tax cuts during the Pataki and Bush years...I don't think that's a winning approach."

The framing of this-"...since they gained so much..."-is all telling; it portrays the return of peoples' hard earned money as if it were a deliverable-a bennie-from the government. And Cantor plows forward, blithely disregarding the meltdown of the state's financial sector, with an anti-growth tax increase that will make it even more difficult for that sector-or others as well-to recover and prosper.

All of which leads to the question of where the state senate will stand on all of these issues-and whether the WFP's role in the Democratic ascendancy will drive its policy positions. As the Politicker points out: "As the details leak about what David Paterson will propose Tuesday in his budget for 2009 - a budget which will have to bridge a $15 billion deficit - State Senator Malcolm Smith's words to a coalition of progressive supporters who met at New York University Friday were improbably upbeat. "For the first time in forty years we have the opportunity to create an agenda in the people's interest, and we are committed to do it," Smith said. "Creating and protecting jobs, promoting economic development, expanding access to an improving health care and reforming health care are things that Democrats and the Center for Working Families hopes to accomplish."

But a budget this bad always creates a nasty zero-sum game. Where the senate stands-and where the state's small businesses and homeowners stand-is the subtext to the ongoing senate leadership fight. We'll give John Riley the prescient last word: "With Senate Republicans non-players if the Dems can get their act together, and Paterson going wobbly before negotiations even start, it seems pretty clear that New York will revert to form: It's a state run by politicians that don't want to cross big unions, who know how to manipulate public opinion and identify their sinecures with the public interest. So, it's always easier to raise taxes, ignore effects on the economy, make taxpayers who are already paying the most in the nation pay even more for their mediocre schools and mediocre health care system, and pretend that the protectors of the status quo are "progressives" defending "working families."