Friday, January 30, 2009

The Taxman Cometh

As the NY Times is reporting, Mike Bloomberg's budget message today will reveal what is quintessential about his political essence: a tax increase is on the way because the mayor has no other creative way to deal with the city's fiscal meltdown. As the Times tells us: "A month after imposing a property tax increase, Mayor Michael R. Bloomberg is expected to call for a $900 million increase in the city’s sales tax on Friday, as the city confronts a loss of revenue due to the economic downturn. New York City already has one of the highest sales taxes in the nation, at 8.375 percent, and retailers are likely to fight the increase."

So there you have it-once again; our Michael one-note doing what he does best: "City officials declined to offer specifics. But according to a budget plan discussed late last year by administration officials, the city could generate almost $900 million by increasing the sales tax to 8.75 percent. Under that plan, the city would also do away with the current exemption on some clothing purchases."

Of course, Bloomberg's hand into our pockets approach won't stop there: "In addition to the sales tax increase, Mr. Bloomberg would eliminate the $400 property tax rebate, for an approximate savings of $250 million. He also planned to renew his call for Albany to approve legislation that would charge customers a nickel for each new plastic bag they use at most stores. So far that measure has not gained great traction with the public, despite supporters’ claims that it is both environmentally friendly and good for the city’s bottom line. There may be other taxes or fees as well."

We have already shown how the Bloomberg approach has helped lead to the loss of stores in the neighborhood; and this continued tax and spend strategy will be a further nail-in-the coffin for the city's local economy. Adam Brodsky captures this in the NY Post this morning: "State and local levies here already top the nation. If taxes spike further, many firms that are just squeezing by won't be able to afford to do business here. That's not good news for a city battling a recession."

But what about downsizing government? Bloomberg gags on this approach-issuing Jeremiads about the return of the 1970s: "His third option, trimming costs, is a step in the right direction - but no game-changer. That's because Bloomberg is philosophically opposed to any serious downsizing of government."

Brodsky's remedy is unconventional for New York City; but, if done in the right way, could be the elixir local businesses need to survive and grow: "Bloomberg also vows - in full-throated demagogic tones - never to repeat the mistakes of the '70s, when the city rolled back services in response to the fiscal crisis. Yet only a wholesale budget-wide restructuring can pave the way for the shrewdest move, the one never mentioned: big-time, across-the-board tax cuts. The huge pluses of such a step are obvious: Deep cuts lure businesses by signaling that the city no longer views them and their workers as cash cows. And the extra money New Yorkers keep could help them weather the economic storm."

Just think what a rollback of the commercial real estate tax would be for retailers-stopping bankruptcies and the job losses that they entail. But did we ever hear Mike Bloomberg call for some of the federal stimulus money to go towards helping struggling local businesses? No, all of the cash is reserved for plugging holes in the never ending spiraling of government spending-an arena where all services are vital: "Nor would we need to hit "vital" services - like policing, fire-fighting and garbage collection, which make up government's core mission. Cuts in those areas would indeed degrade quality of life and hurt the city as much as tax hikes. But there's plenty else to chop: lavish health-care subsidies and other entitlements, runaway school funding - and, of course, compensation packages for municipal employees, including fringe benefits and base salaries."

For Brodsky, this is all about the Bloomberg legacy; but that is something that is already sealed for us. As far as government is concerned, Mike Bloomberg remains a farcical successor to the late John Lindsay-just with more money to buy silence and complicity. Unfortunately, we know the answer to Brodsky's almost rhetorical question: "Does Bloomberg want to be remembered as the mayor who wrecked New York's commercial supremacy by making heaviest-in-the-nation tax burdens heavier? Or would the man touted for his financial acumen rather be known for, once and for all, reining in Gotham's monstrous outlays, lowering taxes, bringing back business - and securing the city's future? In the short term, all that may be at stake is his re-election; in the long term, it's his legacy."

And, as the NY Daily News underscores with a quote from our tall friend Ed Skylar, the mayor remains a creature of his fossilized public philosophy: "In order to close this deficit without destroying the core services New Yorkers rely on, the mayor will need help from all of our partners, from the municipal unions to the leadership in both the state and nation's capitol," said Deputy Mayor Ed Skyler. "We all will have to do our part to get through these tough times," he said."

Mike Bloomberg will never transcend the prison of his limited worldview. It is up to the voters now to see through the smoke and mirrors of the Myth of Mike-finally awakening to the fact that he is no fiscal wizard, but simply the little man behind the curtain.