New York State Budget: More Regressive Ideas From Gov. Paterson

Two days ago I wrote about the proposal to jack up NYC transit fares by 28% and how that was in effect a regressive tax on the sort of New Yorkers whom could least afford it—and how this was being done at the same time New York State Governor David Paterson has refused to consider what’s come to be called the “millionaires’ tax.”

Well, just to add insult to injury, here’s another winner of an idea: New York State has started collecting a $25 child support enforcement fee from those that needed government help to recover child support payments.

To be fair, this insult was originally the brainchild of the Bush Administration and its rubberstamp Republican Congress. As part of the “Deficit Reduction Act of 2005,” the federal government started charging states a $25 fee for child support recovery. However, from then, till recently, New York had covered that fee for its needy residents.

But with the looming state budget crisis, no more. Governor Paterson has decided the state can no longer afford this level of generosity.

Millionaires, however, well, have no fear, the governor is looking out for you.

The “millionaires’ tax” is pretty simple as tax proposals go. Income over $1 million would be taxed an additional 1%, and income over $5 million would be taxed .75% more. New York has one of the highest concentrations of wealth in the country—just one-half of one percent earned 28% of the taxable income back in 2005. The proposed tax surcharge could bring in about $1.5 billion in the first year—or roughly three-quarters of the expected NY budget shortfall.

The millionaires that would have to pay this tax—or at least a few loud ones, like the ubiquitous, selfish, and inevitably wrong Donald Trump—argue that if you make them pay this increase, they just might leave New York. I say, as did the NY Daily News recently, call their bluff.

As the Daily News observed, New Jersey imposed a much larger increase on all incomes over half-a-million a few years back, and they got incredible bang for their buck—about $26 coming in for every $1 fleeing the state.

And they were fleeing New Jersey!

Even New York City’s billionaire mayor, Michael Bloomberg—who had previously been heard whining about a surcharge—now says this millionaire flight threat is a lot of hooey:

I can only tell you, among my friends, I've never heard one person say “I'm going to move out of the city because of taxes.” Not one. Not in all the years I've lived here. You know, they can complain, “Oh got my tax bill, it's heavy.” But they've not ever thought that. My friends all want to live here and understand the value.

He oughta know, right? That is his cohort.

As for the rest of us—that would be 99.5% of us—well, I’m guessing a lot of us have a little less mobility. And since Paterson knows he’s got a captive “audience,” I guess it’s up to this rest of us to pick up the slack, balance the budget, and so, look out for the Governor’s interests. . . whether we want to or not.


(PS The information on the child support fee comes from the office of Senator Hillary Clinton (D-NY), who has called on NY State to stop collecting this regressive tax, and has asked the Senate to increase funding to child support enforcement.)


(cross-posted on guy2k, The Seminal, and Daily Kos)