In January, New York taxpayers had to endure Gov. Andrew Cuomo’s annual Kabuki dance.
The first dance step was his Jan. 3 State of the State Address which was mostly about the state of the governor. After exhausting his arm from patting himself on the back, Cuomo listed a host of proposals, most of which will never see the light of day.
The second step was the unveiling of his $168 billion budget on January 16 for the state fiscal year that begins on April 1. Cuomo accused Trump of increasing the tax burden of many of the highest earners while burying in the fine print his own tax and fee increases.
Since it is impossible to critique all of Cuomo’s dubious prescriptions and claims, I’ll focus on a few of his more outlandish ones.
Cuomo aimed most of his venom at the federal tax plan. “Washington,” he shouted, “has shot an arrow aimed at New York’s economic heart.”
The limited deduction will “compound” his grappling with the $4 billion deficit already projected for the next fiscal.
To restore “economic justice,” Cuomo will challenge the “federal assault” in the courts because its “the first federal double taxation in history, violative of state’s rights and the principle of equal protection.”
Cuomo’s rants are ridiculous. The U.S. Constitution clearly states in Article I, Section 8 that “Congress shall have power to lay and collect taxes, duties, imposts and excises….”
The governor may sue, but it would be merely political theater because the case will surely be dismissed.
Another Cuomo pipe dream: “Developing a plan to restructure our tax code to reduce reliance on our current income tax system and adopt a statewide payroll tax system.”
The Empire Center’s top fiscal expert, E.J. McMahon, agrees with my assessment.
“The idea of replacing all or part of the State PIT with a payroll tax idea is not as simple as it sounds. In fact, any attempt to broadly displace PIT with a payroll tax would be fraught with mind-bending complications and virtually impossible to implement,” he has written.
Cuomo’s claim that the tax plan will “effectively raise middle class and working family’s property tax 20 to 25 percent … and raises their state income tax 20 and 25 percent across the State” is ludicrous.
The Empire Center differs with the governor: “The biggest losers from federal tax reform are not middle-class families in general, but a small number of very high earners, mainly the income millionaires who had been Albany’s cash cows.”
Another, Cuomo misnomer: the tax bill is “trickle down steroids” that “didn’t work in the 80s and it won’t work now.” In fact, the Reagan tax cuts created an economic boom. Between 1982-1990, the economy grew by a whopping 38 percent. Compare that with the anemic Obama economy which grew by only 15.5 percent between 2009 and 2016.
As for Cuomo’s proposed budget, the devil is, as always, in the details.
After weeping and moaning for weeks that Trump’s tax reform will cost New Yorkers more money and may drive many of the top earners to flee the state, Cuomo failed to include language in the budget to decouple sections of the PIT code from Trump’s Tax Reform itemized reduction limits.
As a result, there will be automatic state personal income tax hikes on numerous taxpayers to the tune of $1.5 billion.
The biggest hike, $840 million, will fall on 5.2 million single filers who, according to the Empire Center, “due to a technical quirk in the linage between federal and state law, would lose more than half of their state standard deduction.
On top of the $1.5 billion, Cuomo proposed $500 of tax hikes on various businesses and on opioid sales.
Apparently, Cuomo’s plea for “economic justice” doesn’t apply to tax hikes he wants to impose on hard working New Yorkers.
Cuomo’s belief that his vision, if realized, will permit New Yorkers to “always reach higher, always hear our better angels, always aspire to unify and always point up,” is delusional.
His tax and spend policies will only point New Yorkers to the exit sign that leads to greener economic pastures in low tax states.
