It looks like Governor Cuomo is getting ready to try to raise personal income taxes on some upper-income New Yorkers as part of a deal that might also include some corporate or middle-class tax cuts. "Cuomo Pushes Higher Tax Rates for Big Earners," is the Web headline on a New York Times article that is slightly dialed back in some versions to "Cuomo Pushes New Tax Rates for Big Earners."
The Times doesn't exactly let Mr. Cuomo off the hook, reporting: "He campaigned on a promise of not raising taxes — 'I say no new taxes, period,' he declared on the day of his inauguration — and he repeated that message many times this year."
One of state's business lobbyists, Kathryn Wylde, the president of the Partnership for New York City, is quoted by the Times more or less surrendering. Mr. Cuomo is "appropriately changing the terms of debate from the class warfare language of the millionaires' tax advocates to focus on tax reform that promotes universal fairness," she said.
"He knows it is possible to raise revenues without inflammatory rhetoric that drives business and wealth out of the state," Ms. Wylde said. She added that because lawmakers had moved this year "in the direction of showing they could exercise some discipline over spending," the business community would support a "balanced approach" of spending cuts and new revenues as Mr. Cuomo drew up his next budget.
My sense is that it's not only the inflammatory rhetoric that is driving business and wealth out of the state, but the tax rates, which, on a combined state and local basis, are among the highest in the nation.
The Manhattan Institute's E.J. McMahon has a piece in the New York Post offering an alternative view, which is that what New York is suffering from isn't a paucity of tax revenue but what Mr. McMahon calls "unsustainable levels of spending that Cuomo has, so far, only temporarily slowed." The Web site of the Manhattan Institute's Empire Center for New York State Policy has details — New York is first in the nation in per pupil education spending and also first in total Medicaid spending. Mr. McMahon points out that this is a bipartisan issue: in the last five years of the administration of Republican Gov. George Pataki, state spending rose 40%, including an 11% increase in Mr. Pataki's final year, some of which was over Mr. Pataki's veto. Dial the spending back to those earlier levels and there would be no need to raise revenues, with or without inflammatory rhetoric.
Here, as provided to FutureOfCapitalism by Mr. McMahon of the Manhattan Institute's Empire Center for New York State Policy, is a time series of State Funds spending, the broadest measures of the NY state budget excluding recurring federal reimbursements, which are mainly for Medicaid. The years are fiscal years ending March 31 -- i.e., "2008" means FY 2007-08, etc., and the numbers are in millions of dollars: