Gov. Paterson Nixes Soda Tax and iPod Tax

At a time when Gov. David Paterson's ratings are plummeting faster than the DJIA, this is news definitely intended to help regain a little bit of luster for the Democrat. He's nixing the idea of taxing everything from carbonated beverages to Internet downloads.

With his approval rating at an all-time, Gov. Paterson said this morning that he will drop the so-called "iTunes" tax and other surcharges as potential revenue generators - and plans to use money from President Obama's stimulus plan to help close the state's growing deficit.

In a bid to close a $15.4 billion budget gap, Paterson called for 88 new fees last December, including taxing the sale of downloaded music and other "digitally delivered entertainment services."

Movie tickets, taxi rides, soda, beer, wine, cigars, massages and Internet porn would have also been taxed under Paterson's ambitious proposal.

While taxing all those other goods and services was clearly a bad idea, using the Obama stimulus package to balance the budget is also a bad idea.

It's a one-shot injection of income that does nothing to address structural problems with the state financial house. The state is not hospitable to businesses, and reducing the tax burden is needed to jump start the economy. Paterson's proposals do not do this. Instead, it's looking all the more likely that another surcharge on the rich is going to take the place of these taxes and fees.

Of course, no one has quite defined what rich is in New York. I would not be shocked to find people making $75,000 or more hit with additional taxes and fees. I definitely wouldn't be surprised if people making $150,000 or more were slammed. It goes without saying that those making $250,000 or more would see major tax hikes.

UPDATE:
NY 1 has much more, including video of Paterson's presser.