Morning Read: Gov. Cuomo embraces a tax-the-rich plan?
A foolish consistency is the hobgoblin of little minds, adored by little statesmen, philosophers, and divines — or so thought Ralph Emerson.
Is that the proper context for viewing Governor Andrew Cuomo’s sudden embrace of a plan that would cut middle-class tax rates, while boosting taxes on the wealthy next year?
This from the Associated Press:
The Democrat released an opinion piece for newspapers Monday, building a case for revision of tax brackets and rules to make it “fairer” after decades of inaction. His proposal, major elements of which are still being negotiated with legislative leaders, drew immediate praise and rebuke.
“It is the end of the dominance of the anti-tax message politically,” said Richard Brodsky, a former assemblyman from Westchester who is now a senior fellow at the Wagner School at New York University. “It’s a master stroke from Cuomo in that he doesn’t just solve New York’s problems, he now gets into a national conversation about bipartisanship and fairness in the economy. … This will change national debate.”
Others saw a flip-flop.
“This is just painting a distorted picture of the current and past tax system in order to justify what he’s doing,” said E.J. McMahon of the fiscally conservative Manhattan Institute. “He wants to increase taxes for wealthier New Yorkers, so he is inventing this narrative.”
You can read Gov. Cuomo’s public letter on all this here. He appears to cut to the chase in this passage:
Simply put, to me “fairness” dictates that the more you make the more you pay and the higher your income the higher your rate. Also, you should be treated the same as people with similar incomes and differently from people who make significantly more, or significantly less, than you earn.
I would create multiple brackets and rates increasing on a graduated basis throughout and indexed to inflation. I would add more income brackets for the middle income and add high end brackets. The actual rate span should be several points from low to high.
So what do you think? Does New York need a new tax system, one that shifts a bit more of the burden to high-end wage earners? Is the current system, as the governor argues, unfair? Comments welcome below.
Tags: economy, politics, tax policy
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“Does New York need a new tax system, one that shifts a bit more of the burden to high-end wage earners?”
It’s bait-and-switch.
Once you get voters on board with tax-the-rich, suddenly, everyone becomes “rich” to a politician.
The current system in NYS is like the federal tax system, it’s a mess.
Whoever gave that a thumbs down must work for the NYS taxation department and/or the IRS?
JDM – if the plan is to shift the burden to the high end, how does that increase the burden on everyone else. That doesn’t make sense.
I’m all for a progressive tax rate system in New York. But included in this proposed reform must be a simpler and easier to understand process of paying, filing, etc., income tax. Get rid of deductions, credits, etc. and make it as simple as possible. Such reform might go a long way toward cutting the state personnel needed at the New York state tax department.
Clapton, absolutely. If you did that you could probably lower tax rates across the board and increase income for the state in the process.
There is no reason that you should have to file anything for the federal or state tax payments.
Like I said before we have very dumb system.
great to hear the governor sounding like a real democrat!
yes, exactly right.
Since I only take the standard deduction, including the one for age, I never have a problem doing my taxes.
I do agree the NYS tax forms are more complicated than the federal and this makes no sense to me.
“Simply put, to me “fairness” dictates that the more you make the more you pay and the higher your income the higher your rate.”
HT, the last time I checked this is exactly what we have now.
For all of those who talk about a simpler process, remember the two great carve-outs in the process: the EITC and the mortgage interest deduction. Do you think there is enough political will to eliminate these middle-class loopholes?
As for Cuomo, for sure it’s a flip flop. I can see new information changing someone’s mind, but this sure looks like a pander to the left. Not that I’m complaining about that, but it sure looks like its politically calculated, not a change in personal philosophy.
Paul, it’s what we have now before you start looking at all the loopholes. The post-loophole picture is entirely different. Just ask Warren Buffet’s secretary.
Verplanck, I imagine that the only way to take those on would be as part of a total re-write, and I can’t really imagine it happening in my lifetime.
For starters, though, I could see handling mortgage interest deduction by phasing it out– reduce the amount you can deduct by 10% a year over 10 years or something of the sort. Or start with second homes.
But rich folk, real estate agents and home builders will fight tooth and nail to keep it just as it is.
paul,
i didn’t mean to suggest otherwise. it’s just nice to hear someone like cuomo advocating for progressivity in the tax code. i feel like i hear a lot more from flat-taxers these days.
“Paul, it’s what we have now before you start looking at all the loopholes.”
Walker that is true. I don’t think there is any plan to change that so like I said it is what we have now.
I don’t think you can deduct second home mortgage interest. Can you?
From a recent WP opinion piece:
“Raising revenue through tax reform is better than simply raising rates, which Democrats insist upon with near religious fervor. It is more economically efficient because it eliminates credits, carve-outs and deductions that grossly misallocate capital. And it is more fair because it is the rich who can afford not only the sharp lawyers and accountants who exploit loopholes but the lobbyists who create them in the first place.”
http://www.washingtonpost.com/opinions/the-grover-norquist-tax-myth/2011/11/23/gIQAsuJhtN_story.html
Cuomo insists on making the same mistakes as his colleagues in Washington.
Peter Hahn:
Increasing revenue on anyone 1 cent doesn’t make any sense. We have a “spending” problem, not a revenue problem.
In fact, we have a “spending problem” and a “wasteful spending” problem.
We should be cutting taxes on tax payers, whatever level of income they are at.
JDM – if we need more revenue (and we do) someone has to pay. Raising the taxes 1o cents on the top earners and lowering it 1 cent on the lower earners makes sense.
As I have said before, I don’t want the rich to pay their fair share. I want them to pay MORE.
“we have a spending problem not a revenue problem” thats one of those dumb bumper sticker statements.
What spending problem – what specifically do you want to cut and how much does it cut (and who does it hurt?). You really have to suggest cutting things YOU benefit from, rather than just suggesting cutting things that benefit other people but not you. Thats just selfish and unrealistic.
Brian, Great post. More like this. And to localize this further, how many North Country households are there that make, say, $1M or more and would be affected by these hikes? Also, as you find out more about the proposed rates, you can crunch some numbers and see how many actual local households will be paying more of the rich-folk taxes and compare it with the number of layoffs avoided, services kept, bridges fixed, etc…
“I don’t think you can deduct second home mortgage interest. Can you?”
You can deduct primary home interest, second home interest, as well as home equity loan interest. Though mortgage interest deduciton is limitted to interest on the first million in mortage principal (I think allowable principle for home equity loans is 100k).
While not exactly a “mess,” the tax code is not perfect, either with the interest deduciton being an example of something that unnecessarily costs the government too much revenue.
Peter, the spending problem is in Washington. And it is very real and it could sink us.
Entitlement reform at the federal level is where the solution lies. Unfortunately the current administration refuses to tackle the issue.
Scratchy, thanks. I had no idea that you could deduct second home mortgage interest. Nice perk. Can you deduct home equity loan interest on a lien that is not on your primary residence?
These are often funds that are used to buy things that create jobs. Cars, a new roof, a college education, a kitchen remodel, etc. So I guess it make sense.
total baloney. the administration would love to do entitlement reform. but to do that would require republicans to get on board, and they have zero interest in compromising and zero interest in giving obama what would be seen as a win.
“entitlement reform” is a euphemism for cutting social security and medicare. The current administration is willing to go there but not unless its part of some ‘grand bargain” to solve the big issues. The republicans will only go for small ball on their terms.
Brodsky: “This will change national debate.”
Is that some kind of a joke? Occupy Wall Street is what changed the national debate. Andrew Cuomo has fought it from the start and fought to protect himself and his friends among the 1% or .01% from tax increases.
He faced a hostile meeting of state Democratic committee chairs recently when many Democratic party officials stormed out of the meeting over the Millionaires Tax and Hydrofracking.
Cuomo hasn’t changed the debate, somebody must have told him he better start representing a few Democratic principles or any chance of a future run for President is out of the question.
I agree with Peter Hahn. There is not a serious spending problem in Washington. A majority of voters support social security, a majority support Medicare, we can’t even mention cutting defense without being called unpatriotic. People want these things, yet they refuse to pay for them. Politicians, most being the cowards that they are, refuse to take any action because they might not get re-elected or might not get a political donation from some wealthy donor or big corporation.
I love how those on the right have co-opted the phrase “entitlement” as if Social Security and Medicaid/Care are some sort of public assistance programs and not a programs that people have, in most cases at least, paid into for the majority of their adult life. Most recipients of SS and Medicare/caid have earned these benefits. Which is exactly what they are, benefits and not “entitlements.
Having said that, yes, these programs need reform in order to make them solvent well into the future. But so does the appropriation process that drowns our military/industrial/congressional complex with well over a TRILLION dollars per year to essentially play the role of police man for the world and occupy and defend nations nearly 70 years after the end of WWII. How sane is that when we’re $15 Trillion in debt?
“The republicans will only go for small ball on their terms.”
Peter, the budget proposed by house republicans was “small ball”? You might not have liked it but it was big.
The president’s budget was voted down by the senate 96-0. The democrats in the senate has not proposed a budget in 2 and a half years.
“People want these things, yet they refuse to pay for them.”
That is why we have a spending problem. Why do you think otherwise?
In the real world you can’t have what you wont pay for.
I don’t think otherwise. The people who want these things are democrats and republicans and they refuse raise revenues to keep these programs solvent. We have a revenue problem.
Can’t spend it if you don’t have it. We would all love to have the luxury to just say “hay I want more stuff, or I want this or I want that, I guess I will just give myself a raise till I can afford it!”.
We spend more than we have that is a “spending” problem. Why would you describe it as a “revenue” problem? I guess you can call it that but that is a little unconventional don’t you think?
Nope. Remember, we had a revenue surplus before W gave it back.
Gotta deal with where we are not where we were.
Paul, let me clarify. Both SS and Medicare are funded with payroll taxes. Both those programs seem to be popular. You can solve any funding problems in those programs without even talking about federal income taxes. For example, I’ve read that long-term funding for SS can be realized by gradually raising the retirement age to 68 (over 20 years) and by gradually increasing the amount of income subject to SS tax (again over 20 years).
And one way to deal with where we are is to go back to where we were.
Also – Paul – the “small ball” I was referring to was in the Super Committee deficit reduction proposals.
That republican budget (the Ryan budget) was indeed big thinking but mostly symbolic. Signature issues in the that budget like privatizing medicare aren’t going to happen (I hope). Who wants to pay an extra 6K per year for retiree health care insurance. Sure it saves the “tax-payer” a whole bunch, but if you are retired and need medicare to pay your health care you aren’t paying much in federal taxes. and that 6K may be more than you are comfortable paying.
Why go there when, as PNElba points out, a little tweaking over a long time period can fix things (for SS). Medicare needs better health care reform (like a single payer) to get costs down.