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)

NYC subways: fare hikes, service cuts. . . is this the change we need?

Tell me you didn’t see this one coming. MTA Chief Elliot Sander announced this week that economic times being what they are, the Transit Authority’s deficit was going to balloon to $1.2 billion, and so service cuts and substantial fare hikes were now inevitable.

The MTA had already slated eight percent fare increases for next year; they now say they will need an additional 20% to make up shortfalls caused by increased fuel costs and decreasing property values (the MTA gets a good chunk of its budget from property and property-related taxes). If an increase like that is approved, the price of a single ride on a New York City subway or bus would climb above $2.50.

Capital improvements and service expansion are already lagging far behind the needs of a city expecting to grow to a size of 10 million in the next decade, but even if Sander gets all of his fare boost, service and improvements will still have to be cut back to trim the deficit.

The Metropolitan Transit Authority is hardly the only state agency facing a budget crisis as the Bush economy and the Wall Street meltdown send shockwaves through the New York economy. (For those of you not familiar with NYS politics—yes, the city’s transit system is run by the state. It was taken from the city during the 1970s fiscal crisis, and NYC never got it back.) Governor David Paterson, who has already negotiated state budget cuts, is demanding the legislature return for another round—and for that round, Paterson is proposing a 25% haircut.

Still, Paterson has made it clear: there will be no state tax increases.

What Paterson means by that, of course, is that he will not countenance a state income tax increase. The ousted Spitzer Administration had floated the idea of a “millionaires’ tax”—a surcharge on the highest of highest incomes to help New York meet its obligations—but Paterson, formerly a state representative from Harlem and once considered a liberal, has thrown that baby out with Eliot’s bathwater.

Of course, a 28% fare increase—more than a dollar extra for every roundtrip commute—would effectively (if not officially) be a tax increase. . . except this one would primarily affect the other end of the economic ladder.

To reiterate: For millionaires, who don’t take the subway all that much—no new taxes; for working class New Yorkers, who do use the subway daily to get to and from work—how does paying an extra $260 per year sound? (That’s per person—if there are kids that use the subways and busses to get to school, multiply accordingly.)

NYC is the economic engine of New York State. (And city residents already pay a disproportionate amount to fill state coffers—they pay out more than they get back in services and benefits.) The fuel for that engine is the city’s workforce—and that workforce relies in large part on public transportation to get to work. Without a functioning and affordable public transit system, New York City’s commerce—the state’s engine—would grind to a halt.

So why is it that all anyone can think of when times get tough is to cut service and raise fares? Why take one of the great advantages that New York has over most other American cities and hobble it? Is it that hard to think of anything else to do?

Let me give it a try. . .

First off, it is high time that control of the city’s mass transit system is returned to the city. For far too long, income from the total of state transit systems has gone disproportionately to commuter rail; subway and bus riders have effectively been subsidizing suburban rail commuters. That has to stop. I’m not saying that commuter rail isn’t important—it is vital—but the subway system is more vital to the workings of New York City, and it deserves the full benefit of its income.

Second, how about some creative thinking?

New York City and State pay more in taxes to the federal government than either gets back—so it is in America’s best interest to keep the New York economy growing. So how about we integrate some of NYC’s financial problems into the national thinking on bailouts and stimulus?

If Washington is going to spend billions to bailout the auto industry, why not spend a couple billion to help out systems that are better for the economy and the environment than cars? Seriously, not only does the MTA itself provide good-paying jobs to thousands of New Yorkers, capital improvements would provide even more, and the service that the MTA provides increases the productivity of practically all city businesses. Backstopping automobile manufacturers will cost tens or hundreds of billions, and I can’t even begin to tell you how much of that will go to the credit divisions, or legacy costs, or executive compensation, or shareholder value. I can pretty much guarantee that one or two billion to the MTA will deliver much more bang for your buck.

Here’s another idea: The coming infrastructure bill. . . what says infrastructure more than subway and light rail? Why shouldn’t the New York congressional delegation insist that this promised investment in infrastructure pick up the tab for system upgrades and expansion? Let fares go to the day-to-day operating costs. For all the reasons cited above, I am pretty sure that few infrastructure investments will provide better ROI.

I got another: What say we reduce the burden of rising fuel costs by making the New York transit system one of the stars of the new green economy? Spur plug-in hybrid innovation by promising the best technology a crack at replacing all of NYC’s busses. Fund an initiative to find a self-sustaining way to generate all the electricity needed to run the subways. Yes, that’s dreaming big, but a) not that big, and b) isn’t that the change we need?

So there you go—in fifteen minutes, I just outlined three (or was that four?) possible alternatives to fare hikes and service cuts. And I am just doing this on my own, pro-bono. There are staffs of paid experts and consultants at the MTA’s and the government’s beck and call—where are their ideas?

Indeed, I’ll go a step further: where is the political leadership? Why is it that the best anyone can think of is to make the poor and working class suck it up, pay more, and make do with less? What makes that leadership? That’s the simpleton’s solution. That’s the coward’s way. Why should we reward that?

When I went to the polls here in Manhattan last week, I didn’t just vote for change at the federal level; I voted for my US Representative, and my state senator and assembly member, too. Two years from now, I’ll vote for all of them again, and a Senator. I expect them to be full participants in promoting the vision and the programs that were highlighted in the campaign of our president-elect. What better place to begin than right here at home?


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