Friday, March 27, 2009

NYS Contemplating Taxing Rich; Middle Class Will Be Hit

The Democrats running the show in Albany are contemplating any number of plans to hike taxes on New Yorkers, including a personal income tax hike that hit incomes of $300,000 or more per year. For much of the rest of the country, that would be rich, but in New York, that's not always the case given the substantially higher cost of living.

The problem isn't that the Democrats are pushing these taxes, but that they're doing so in a vacuum. They aren't addressing the profligate spending in any serious fashion. The threats are made, but the unions will push back and the politicians will cave.

What this tax hike will do is further distort the tax revenues generated by the highest wage earners in the state, where state revenues are already grossly distorted to the point where 5,000 taxpayers pay 30% of the NYC taxes.

Assembly Democrats are stalling on a measure that might see an increase of the state sales and use tax, but that doesn't mean that dozens of other fees and taxes will be raised in to the teeth of a recession.

Ignored is the fact that by taxing businesses and individuals more heavily during the recession, the government will end up taking in far less revenue than anticipated because the people hit by these taxes will be spending less of their money and paying more in tax. It's counterproductive, and few in Albany seem to understand this. Also ignored is that the budget deficits are so large that the tax and spend set can't make up all of the deficit by taxing the rich alone. They're going to start whacking the middle class as well.

Contemplate also that those who are stalling on a MTA bailout plan who claim to represent New York City don't even have Metrocards.

The NY Times reports a bunch of activists have come up with 64 ways to "save" the middle class, even though many of the proposals will require tax hikes to cover the additional costs. Other proposals, like increasing the City minimum wage, will send businesses looking elsewhere to start up, rather than face higher costs for entry level jobs. It will mean higher unemployment for entry level workers, not lower.

No comments: