A familiar national battle is heating up in New York state: the debate over tax levels on the wealthy. Like many blue states, New York is a model of income inequality and it has both large numbers of millionaires and billionaires and large, hungry public employee unions.Despite opposition from Governor Cuomo, various interest groups and their friends in the state legislature have begun to push hard for an extension of the current tax surcharge on those with incomes above one million dollars. From the New York Times:
Mr. Cuomo insisted that under no circumstances would he consider backing the extension of the surcharge, saying it would encourage residents and businesses to move to other states. He said he would support a federal millionaires’ tax, because it would treat residents of all states equally.The governor, aided by Senate Republicans, this year succeeded in warding off efforts by Democratic lawmakers during the legislative session to extend the surcharge, which expires Dec. 31.But the Occupy Wall Street movement and the spreading protests it has inspired — scores of people gathered at the Capitol on Saturday, and an occupation is planned in Albany beginning at noon Friday — have reinvigorated lawmakers, organized labor and community groups that advocate for the tax’s extension. The surcharge was a primary topic of conversation at a retreat hosted by the New York State Black, Puerto Rican, Hispanic and Asian Legislative Caucus on Friday; those lawmakers overwhelmingly agreed that they wanted to press further in favor of extending the measure.And on Monday, various advocacy groups and labor unions, including New York State United Teachers and many of the state’s other largest unions, formed a coalition to start what they described as a “renewed” push for the surcharge’s extension. They are calling themselves 99 New York, a reference to Occupy Wall Street’s theme of representing 99 percent of Americans rather than the richest 1 percent.
Note the deep wishful thinking about OWS. When a proposal with massive trade union backing can rally only “a few scores” of demonstrators to the union-worker rich state capital, this is not a sign of a political groundswell. It is just the opposite: a sign of advanced arteriosclerosis and apathy. Turning out crowds for demonstrations is one of those things that unions do; that they haven’t bothered with more than token crowds is a sign of the weakness of the OWS brand, not, as the Times coverage glibly suggests, its strength. And to suggest that the hacks and timeserving careerists who run the state government lobby groups for powerful vested interests were ‘inspired’ by these protests into actions they weren’t already planning is delusional. The fight over this tax extension is a central piece of the legislative strategy of the union lobby, and there is no doubt that the lobby would be making a powerful push — OWS or none, tiny demo in Albany or not.The Times is simply repeating talking points and spin here without a grain of thought or real journalism. Bad, and dumb.One wishes Governor Cuomo well. There are certain situations where a tax surcharge could be justified — especially if the money raised were paired with budget cuts and used to stabilize the state’s shaky finances. New York badly needs to stabilize local and state government finances as the municipal and state bond markets could force higher interest rates on overly indebted, slow growing government units in times to come.But a cursory look at the groups lobbying for the surcharge extension shows that the fight is about getting another fix, and not about cleaning up the state’s fiscal act. Powerful public sector unions and various liberal interest groups are the primary backers of the measure, and the plan is to use new revenue to prevent budget cuts. This is about making the state’s problems worse, not helping to fix them: advocates want to prolong the party that got the state in trouble in the first place.The real problem with these demands isn’t so much the tax surcharge itself, but what it says about state politics. Public employee unions and other vested interest groups retain outsize power in the political system and they are utterly determined to prevent the deep reforms that could rebuild the upstate economy and help New York City prepare for a future in which Wall Street is decentralizing away from the region.For generations, New York state and New York city were powerful job generating machines. Now both are living on capital, strangled by taxes and regulations, unable to maintain infrastructure or provide decent services at a price they can afford — and increasingly dependent on the financial industry for revenue and growth. The state’s elite is almost entirely indifferent to the state’s health and well being; our state is crumbling around us and almost nobody cares.Having driven out one industry after another, the state’s all powerful anti-growth, pro-tax lobby has turned its gimlet eye on the one goose on the farm that still lays golden eggs: the millionaires and billionaires in the financial service sector. This will not end well for the state or the city; New York needs to reduce its dependency on Wall Street, not to increase its dependency on Wall Street while simultaneously giving Wall Street more reasons to flee.The notoriously slack New York Times coverage of state politics is one of the reasons New York is one of the country’s worst governed states; sadly, nothing seems to be changing.