Thursday, February 12, 2009

Government In Competence

If patriotism is sometimes the last refuge of scoundrels, than tax hiking is certainly the last refuge of the ideologically brain dead. With massive state and city budgets-and hundreds of questionable programs and service redundancies-it takes a real lack of imagination and political will to call for higher taxes as a response to the current budget crisis. Enter Chris Quinn.

In her today's State of the City speech, the council speaker will call for a raising of the city's income tax: "In another one of her rare breaks with Mayor Bloomberg, City Council Speaker Christine Quinn is poised to propose a three-tiered tax increase on New Yorkers earning more than $300,000 a year while also eliminating the PIT for low and moderate-income households. Quinn will unveil what her office is calling a "forward-thinking" and "progressive" plan at her annual State of the City address tomorrow."

Forward thinking, as in back to 1974 forward. Quinn, who has never held a real private sector job, and has certainly never run a business, is apparently blind to the fact that the city is poised to lose hundreds of thousands of jobs-and its small businesses in the neighborhoods are going into bankruptcy at a record pace. Cutting taxes and regulations-something that would ameliorate the economic climate for these entrepreneurs-is apparently regressive.

Here's a preview of her outlook: "We’re not afraid to ask those who’ve gotten the most from New York City, to give a little back when times get tough. And for New Yorkers on the other end of the spectrum, we need to offer some relief." The idea is based on a simple principle. Those hit hardest by the economic crunch deserve some assistance. And those of us doing better should be doing more to help."

This is certainly a strange formulation-those who have, "gotten the most from the city." As if it were, "the city," that somehow bequeathed largess to these few fortunate folks, and now is asking that they recognize their favored status by giving a little back to the unfavored. All of this, of course, is blind, class-based policy; one that fails to recognize just how much the entrepreneurial class, especially its immigrants, has contributed to the city through ingenuity and hard work. People like Pablo Guzman who employs six workers in his Harlem bodega, and who just may now be required, in Quinn's world, to give more help to others.

All of this overlooks the fact that these are the folks who have been giving back the most-as income tax revenue is already skewed, heavily dependent on these fortunate few; and using Bernie Madoff is as invidious as it gets: "Right now, New York City taxes everyone making above $90,000 the same. It’s shameful - Bernie Madoff pays the exact same tax rate as a public school principal," Quinn will say in tomorrow's speech (according to excerpts provided by her office). "That’s not sharing the burden. It’s a slap in the face."

But the speaker's mindset is mirrored by that of the assembly speaker-and it reflects a genuine refusal to acknowledge the correlation between economic stagnation, attendant job loss, and higher taxes-whether personal or otherwise; and this outlook apparently doesn't appreciate how important an entrepreneurial class is to the economy, since it is so eager to show it the door.

Which is why we pay tribute today to both Malcolm Smith and Andrew Cuomo-two elected officials who are mindful of the role of taxes and incompetent government. Smith, for his part, is holding his own against the "unfair share" tax philosophy. As the NY Post reports: "Assembly Speaker Sheldon Silver found himself up against a surprise adversary yesterday when the new state Senate Democratic leader publicly challenged his claim that an income-tax hike would not force wealthy taxpayers from the state. Senate Majority Leader Malcolm Smith of Queens said a millionaire's tax had "the potential of driving some people back into a shelter" because the rich could move more easily."

And, as the Post reminds us, the Wall Street engine isn't any longer the engine that could-so that comparisons to post 9/11 are erroneous: "There's no evidence that income-tax hikes drive people out of the state, Silver declared, defending his cherished "millionaire's tax." In fact, he continued, the last time the state tried it - a temporary hike in 2003 - the economy boomed.
Well, sure. The 9/11 attacks had grievously - albeit temporarily - damaged New York's economy. And the '03 tax hike Silver extolls was tiny compared to what's now on the table - so Wall Street was back in business in no time. Thus New York still had a functioning financial sector to keep high-income-earners tethered despite the higher rates. That asset is gone now - as even Silver's own budget analysis acknowledges."

Which brings us to Andrew Cuomo. The AG set out an interesting concept yesterday at a Citizens Budget Commission pow wow-making government more efficient and competent: "In this time of crisis, Cuomo said, New York needs a government that can "actually perform and perform quickly." He reminded the well-heeled, civic-minded crowd that the state used to be seen as a model of progressive, competent and forward-thinking government rather than being known, rather infamously, for being home to the nation's most dysfunctional Legislature."

And when we are finding out that Senate Republicans have been squirreling away millions in partisan patronage gigs-wasteful spending that few were even aware of-we know instinctively that we've just hit the tip of the ice berg. But where is our city Cuomo? No one we have seen in this election year-from the mayor on down-has even talked about reducing the size of municipal government in the name of incompetence. Instead we get the fair share concept that always ends up meaning that the government gets to abscond with more of your money because; What could be fairer than that?