COMMENTARY
Rod Watson: Overtaxing middle class simply unfair
Gov. David Paterson’s slash-and-burn (and then tax the fire) budget may get average New Yorkers so mad that they will do what they haven’t done in six years — decide the burden needs to be shared more equitably.
While the liberal-turned-governor has been steadfast in rejecting a so-called millionaires’ tax on high earners, advocates think legislators — who passed one over then-Gov. George Pataki’s veto — are more amenable.
They should be.
Given the cuts Paterson is proposing — to schools, hospitals, nursing homes, etc. — and the 151 increases in taxes and fees on everything from registering a car to drinking a sarsaparilla, the middle class should brace for a wallop.
While critics of “big government” see this $15.4 billion crisis as an opportunity to reshape state operations, it’s also an opportunity to rethink the kind of New York we want to live in.
After watching their retirement plans and other investments shrivel or disappear — along with job security and the value of their homes — middle-class residents already are paying for an economic crisis not of their making.
They will pay even more, not only in Paterson’s fee hikes and service cuts, but in property tax hikes if localities have to make up for what the state used to do.
While middle-income homeowners ponder that, the Fiscal Policy Institute has shown that over the last two decades, the richest 20 percent of New Yorkers have seen their incomes grow at four times the rate of those in the middle quintile.
Similarly, the elimination of tax brackets at the top and bottom of the scale in recent decades has compressed all New York taxpayers into a narrow range so that, as one critic put it, Donald Trump pays virtually the same rate as his chauffeur.
Maybe that’s why a Quinnipiac University poll two weeks ago showed that New Yorkers overwhelmingly back the idea of raising the income tax rate on those making more than $1 million a year.
Not only could it raise up to $7 billion and close nearly half the budget gap, depending on how it’s done, but it could restore some of the fairness in a society in which we rightly expect more of those who benefit more.
And as the Fiscal Policy Institute documented when there was a temporary surcharge from 2003 to 2005, it did not drive wealthy people from the state. The number of tax returns from high earners actually increased during that period.
All of which argues for making a high-earners’ tax part of the budgetary package — along with spending restraints and mandate reforms — so that the middle class doesn’t shoulder the burden alone.
“It’s getting more traction than you might think,” Working Families Party spokesman Dan Levitan said of the idea, while correctly calling Paterson’s laundry list of nuisance taxes “a massive cost-of- living increase for regular folks.”
Paterson did not mention the high-earners’ tax during Wednesday’s State of the State speech, even while calling this “a time for courage.” But Fiscal Policy Institute Executive Director Frank Mauro notes that almost all of the governor’s proposals, when looked at in percentage terms, would have their greatest impact on middle-and lower-income New Yorkers. The courage to impose a surcharge on high-earners could offset that imbalance.
And if those earning $500,000 or $1 million a year really think that would be a burden, they could comfort themselves by knowing that other New Yorkers would love to be in position to pay such a tax.
