Cuomo Pushed Tax Reform Quickly, but at What Cost?
Many New Yorkers have wondered how Gov. Andrew Cuomo managed to strike a deal with the legislature on a tax reform plan he’d proposed only two day earlier. The answer, the New York Times pointed out, is stealthy political maneuvering. While Cuomo’s expedient push to raise taxes on the wealthy pleased many people of disparate political beliefs, it has also raised concerns about the governors’ apparent disregard for transparency.
While many members of the state legislature, as well as labor groups, are pleased with Cuomo’s announcement, some Republicans are crying “broken promise,” while other fiscal progressives are still skeptical of whether Cuomo’s plan can do enough to close the budget gap and create jobs.
The governor said he wants to use the tax revenue to smooth out the state’s deficit, stimulate work on bridges and infrastructure, fund job training programs for young people and contribute to his quest to legalize resort-style casinos.
On Dec. 4, Cuomo issued a letter to reporters calling for “comprehensive tax reform” that would raise taxes for the wealthy and provide cuts for the middle and lower classes, reported the New York Times. During his campaign, Cuomo pledged to oppose tax increases, but despite the reversal prominent, GOP legislators have shown support for Cuomo’s tax agenda. This apparent flip-flop hasn’t received the amount of backlash one might expect.
“I think that certainly we could make the tax code fairer. As it’s currently configured, I don’t think it reflects the wide array of incomes that we do have,” said State Sen. Jack Martins, a Republican who represents Nassau County, reported Lower Hudson Blog.
Martins isn’t alone among GOP members supporting Cuomo’s tax plan, but that seems interesting at a time when President Barack Obama is deadlocked with the Republican Congress over somewhat similar tax changes.
Since he took office, Cuomo has won over many Republicans by reaching concessions with public workers’ unions and introducing an unusually high number of budget cuts for a Democratic governor. Also, many upstate Republicans are still reeling from the fallout from Tropical Storm Irene, and desperate for new cleanup funds from the capital.
Cuomo was good to fiscal conservatives in 2011, but there’s a million dollar answer as to why the governor is calling for tax reform. The so-called millionaire’s tax is set to expire on Dec. 31, which Cuomo intends to allow. And by proposing these new tax reforms, rather than extending the controversial millionaire’s tax, he avoids criticism that he’s waging class warfare, while still reducing taxes for lower-income earners, reported Lower Hudson Blog. Assembly Democrats said Cuomo’s new tax plan could generate an added $2.8 billion annually.
Susan Arbetter talks to two economists about Cuomo’s new tax proposal. Video courtesy of the Capitol Report.
Not surprisingly, many Senate and Assembly Democrats and labor organizations have reacted positively.
“Unemployment is painful to individuals and destructive to society, and the governor, the speaker and the majority leader have a chance to demonstrate that the 1 percent do not control politics in New York,” Dan Cantor, the executive director of the Working Families Party, told the New York Times. The Times, along with Sen. Gustavo Rivera, have suggested that Occupy Wall Street’s repeated calls for higher taxes on the wealthy may have influenced Cuomo’s decision.
Even some pro-business leaders, like Partnership for New York City President Kathryn Wylde have offered praise. “He knows it is possible to raise revenues without inflammatory rhetoric that drives business and wealth out of the state,” said Wylde.
Does this seemingly widespread agreement over Cuomo’s proposal bode well for next year, or is a seemingly viable plan too good to be true? Here are your dissenting voices:
- Manhattan Institute economist E.J. McMahon called Cuomo’s proposal a “smokescreen,” suggesting the governor might attempt to reverse his stance on the millionaire’s tax after quickly pushing his new tax reforms through the legislature, reported the New York Post. And on a recent episode of the Capitol Report with Susan Arbetter, McMahon said, “We have a progressive tax structure. That is a fact no one is prepared to admit.”
- State Sen. Liz Kruger, a self-identifying Nixon liberal, said shifting the tax burden from the poor and middle class to the wealthy without reducing the deficit is a major mistake, reported Capital New York.
- Mayor Michael Bloomberg responded skeptically, when asked about Cuomo’s proposal. “You’ve got to get your expenses under control and build the economic base so that if you have tax revenue increases they should come from…an expanded economy, as opposed to expanded…tax rates,” Bloomberg told the New York Times.
- State Conservative Party Chairman Michael Long said of Cuomo, “He’s the one who made a principled stand. Whether you agree with that principled stand or not, once you break a principled stand, then one wonders what you can count on him for in the future,” reported the Star-Gazette.
- The New York Daily News editorial from Dec. 6 expressed a mixture of hope and skepticism about Cuomo’s proposal, writing, “The governor has yet to get specific about any numbers. So it’s impossible to pass judgment on the wisdom of a plan that could have great appeal for both fairness and fiscal stability.”
- The Star-Ledger published an editorial claiming the tax change would hurt New Jersey, since the wealthiest commuters would owe more to Albany, and thus less to Trenton.
Cuomo has yet to explain the specific details of his plan, but said he and members of the legislature have been in negotiations. But according to the progressive-leaning Fiscal Policy Institute Executive Director Frank Mauro, “Real recovery won’t happen until Washington increases spending on jobs and infrastructure investment. In the meantime, New York can balance its budget and provide real middle class tax relief and a boost to job creation through sensible income tax reform — where the 1 percent lend a real hand to the 99 percent.”