This week, New York state passed a painful austerity budget, slashing billions of dollars in programs from hospitals, schools and other programs without raising taxes.
Governor Andrew Cuomo has made the argument that the Empire state is already taxed to the point of exhaustion, and that we have to make cuts rather than increase revenue.
But he’s wrong. There is a massive source of new revenue out there that is going untapped, one that New Yorkers desperately need.
I’m talking about the Federal treasury. And no, I’m not suggesting that Gov. Cuomo advocate for a hike in the Federal income tax.
But he should demand an end to the massive and shameful redistribution of taxpayer wealth.
The system now in place results in heavy taxation in states such as New York, New Jersey and California, with a wildly disproportionate amount of that money flowing into other low-tax states, such as Alaska and Wyoming.
According to the most recent parsable data that I could find — for 2004 — the average New Yorker paid $7,940 in Federal taxes.
But in that year the Federal government only spent roughly $6,200 per person in programs here, everything from Medicaid reimbursements to road and highway building to education funding.
What happened to the additional $1,700 per capita? It went elsewhere, paying for programs and infrastructure in other states.
Some states have it even worse than New York. New Jersey receives back only 61 cents for every dollar that their workers pay in Federal taxes.
Connecticut — the most highly taxed state in the nation — receives back only 69 cents on the dollar.
There was a time when this redistribution of wealth made sense. America was a frontier nation.
Wealthy eastern states were helping to build the infrastructure — everything from the Tennessee Valley Authority to Hoover Dam to interstate highways — in parts of the country that were underdeveloped and struggling
But that era is long since over. Many of the states that are now being stripped of Federal tax dollars, including New York, Illinois, California and New Jersey, are in crisis.
We desperately need every tax dollar as we rebuild our economies, our cities, our schools and our infrastructure.
There’s another, urgent reason to stop this unfair redistribution of wealth: It would allow our cheated states to lower state income taxes to more equitable levels.
Because states such as Alaska, Mississippi, and New Mexico receive a lavish bounty in Federal spending (roughly $2 for every $1 that they pay in Federal taxes) they don’t have to raise state taxes to pay for their programs.
Why should they, when we’re picking up the tab? Alaska — one of the biggest recipients of Federal cream — doesn’t even have a state income tax.
Which means that a state like New York is forced to compete for jobs and businesses with low-tax, high-benefit states — and we are forced to subsidize them in the process.
As Western New York crumbles, and once-proud cities like Buffalo continue to decline, this has to end. We can no longer afford to build roads and high speed data lines and dams in other states, while our own crumble.
Governor Cuomo has proved with this state budget that he can win big fights.
It’s time for him to rally New York state’s Congressional delegation — Republican and Democratic — and demand that New York state receive at least 90 cents on the dollar for our contribution to the Federal treasury.
The other ten percent should continue to go to non-state-specific spending, such as national defense, and border security. That seems only fair, and responsible.
But it simply doesn’t wash for one out of every five Federal dollars taxed in New York to be siphoned away.
The stakes here are high, maybe even “transformational,” to borrow one of the governor’s favorite words.
According to my back-of-the-napkin-very-rough calculation, bringing our return-on-investment up to 90% would mean an additional $27 billion in Federal spending each year for the Empire state.
To put that in context, it’s nearly three times the amount of the state budget cuts that Albany just approved.
Sure, other states would feel the pinch if we bring more of our Federal dollars home.
But if they really want all those programs, all those new roads and bridges, teachers and hospitals, they can boost their own state income taxes and pick up the bill themselves.