Monday, December 27, 2010

Timely Tax Tips

NY State-along with a slew of other profligate brethren-is in a massive fiscal mess; and, as we have pointed out, the out migration and loss of congressional seats is a consequence of the problem. As our posted exchange between some of the folks that we feel have really given thought to this issue underscores, NY's high tax environment is a major contributing factor.

But just when you might think that there is an emerging consensus on the causes of the fiscal malaise, along comes the NY Times-with its patella reflex fully operational-calling for higher taxes to address the problem: "During the last year, 23 states raised taxes and fees, but only eight increased personal income taxes. Ultimately, states are going to have to acknowledge that more effective, targeted tax increases are inevitable, and can be achieved if they are structured properly. Governors also must explain to voters that they have cut spending. The nation’s richest taxpayers just got a windfall in the federal tax deal extorted from President Obama by Republican senators. States should not shy away from asking for more help from those most able to pay."

If this came from anyone but the NY Times, it would be a jaw dropping observation-and the contention that the rich got a windfall when Republicans, "extorted," a tax deal from the president is truly otherworldly. But the paper has more astonishing things to say: "Many conservatives have said the revenue decline is a good incentive for states to cut their spending. That is precisely what almost all states have done, because they are legally barred from running deficits. State spending fell by 3.8 percent in the 2009 fiscal year and 7.3 percent more in the 2010 fiscal year, the only significant declines since at least the 1970s, even as the cost of education and health care rose."

Yet, buried in this barnyard offal is the following acknowledgement-counter intuitive if you've been reading the Times editorials for the past twenty or so years: "Starved for revenue and accustomed to decades of overspending, many states have been overwhelmed.” But if this is true, as Ed Driscoll suggests, then: "For surely if there have been decades of overspending, there need to be serious cuts in or elimination of many programs that have ballooned in recent decades—not just some spending trims, or returns to (say) 2009 or 2008 levels."

But, as far as NY State is concerned, a state that utilized federal porkulus money to keep the spending spigot gushing-the minimal spending cuts never really materialized; In NY, as even the Times admits, federal dollars forestalled significant fiscal discipline: "Although revenue is likely to tick up slightly in 2011, federal stimulus money — which has been keeping many states afloat — is largely scheduled to expire. Renewing a portion of that aid would be one of the most effective ways to assist the economy."

What the Times fails to point out, is that New York is spending money way beyond its means-and has a veritable Leviathan that is sponging revenue up at the expense of our hapless tax payers and businesses. On top of this, there are all of the other costs of living here that stimulates the migratory urges of fed up New Yorkers-as one media professional tells us in yesterday's NY Post: "Like lots of media professionals (and fashion mavens, artists, musicians, et al.), I’ve penciled out the numbers for what it would mean to take a job in New York City. There’s barely enough room on the back of the envelope for subtracting the double-dose income tax hit from the city and state, and that’s before even adjusting for cost of living. That’s one of the reasons I’m in Dallas. You know, Texas, the state that parlayed this year’s census data into four new House seats — pinching the two lost by the Empire State — because people actually want to live here."

As Eric Torbenson goes on to say: "Folks are voting with their pocketbooks; between 2000 and 2008, $846 million of New York’s personal income saddled up and jingle-jangled down to the Lone Star State. Nobody’s saying New York’s lost appeal from a career standpoint — it’s still the epicenter of finance, media, law and all that. It’s the paycheck crunch that can turn an offer of a lifetime into No Sale.The figures work this way on a pitch to come live in the Big Apple: You can get a 17% raise, but you’ll still take home less pay compared to that Texas job. But I hear the rent is cheap, right?"

But the Times is as undeterred-as it is unenlightened: "Many governors claim tax increases are ill-advised during a recession, but more experienced economists say it is better to raise taxes on the rich than to lay off workers and cut spending, in effect offsetting Washington’s attempts at stimulus. The federal government missed a chance to begin to act rationally about its long-term deficit by giving away the store to the rich in the tax deal. States should not make the same mistake."

Can you believe the effrontery of these cloistered clowns? Laying off workers and cutting spending would, "offset," Washington's efforts at stimulation? Yeah, right. How exactly has that worked out so far? And who are these experienced economists that the Times is relying on-an entire cohort of debunked Keynesians?

Who else but these knee jerks could think that allowing folks to keep their own dough is actually, "giving away the store?" So, as we await the inauguration of the new governor, our counsel to him is quite simple: Whatever the Times advises, do exactly the opposite. Which calls to mind Bill Buckley's famous observation, and we'll end on this note-simply substitute the Times editorial board so Buckley's witticism can be appropriately applied to Pinch's pipsqueaks: "I'd rather be governed by the first 200 names in the Boston phone book than by the Harvard faculty."