| Let's cut right to the chase: Fair Share Tax Reform (FSTR) is the way to go. It would provide progressive reforms to the state's marginal tax rate that stands at 6.85 percent for everyone. So if you make $40,000, you are paying the same rate - 6.85 percent - as someone making $400,000 or $4 million.
Apparently, Fair Share Tax Reform hasn't caught on with Deputy Majority Leader Jeff Klein. Klein has proposed a plan that will increase taxes on higher wages earners while cutting taxes for the middle class. In his plan, he argues that this will not only be a revenue-producing plan for the state (he projects his plan will bring in $1 billion), but it will also help stimulate the economy.
Klein's proposal doubles the standard deduction for every type of tax filer and provides a tax cut in the form of a debit card to ensure spending (the standard deduction is a dollar amount reduced from one's total taxable income, thereby reducing their tax liability). Currently, a single person with an adjusted gross income of $60,000 can deduct $7,500 from their income, resulting in taxes on $52,500 of the filer's income rather than $60,000. Under the Senator's plan, the standard deduction would increase to $15,000 for a single person, resulting in taxes on $45,000 of the filer's income rather than $60,000.
"This is an opportunity to reform an antiquated tax system and start a conversation about creating a system which is more fair and equitable. We need to provide real relief and recovery for middle income New Yorkers who need it the most, while at the same time seeking solutions to generate revenue," said Klein
Klein's proposal also increases taxes on individuals making more than 250K/year with rates increasing from 6.85 to 8.97 percent for millionaires and 10.3 percent for income above $3 million.
Whether single married or retired, households making less than 250K would receive tax cuts ranging from $466 to $1,165 in the form of a debit card. Individuals will be able to use the debit card as they would a gift card- solely for spending, thereby stimulating the economy. The cards will have an expiration date in 2009, as determined by the Dept. of Taxation and Finance, with unspent money reverting back to the state.
Klein's plan isn't necessarily bad, but it's far from the best plan. Fair Share Tax Reform is the way to go. While Klein's plan would bring in an estimated $1 billion in revenue for the state, Fair Share Tax Reform would bring in $6 billion by raising the marginal tax rate on those making $250,000, $500,000 and $1 million.
The stimulus part of Klein's plan is interesting, but I don't see how that would be successful. We need tax reform in this state. We don't need anymore band-aids. While it is honorable for Klein to come up with his own plan, it isn't smart to give everyone a band-aid and say that you are "stimulating" the economy.
If you aren't sold yet on Fair Share Tax Reform, read this piece by The Nation's Katrina vanden Heuvel. In the piece, vanden Heuvel makes a great case for why New York needs Fair Share Tax Reform. Here is an excerpt:
Now that thirty years of deregulation and tax cuts for the wealthy have failed so spectacularly, creating an economic catastrophe in its wake, the American people are beginning to recognize conservative economic policy for what it is: a disastrous recipe for privatizing profits and socializing costs, and shifting the economic burden to the poor and middle class.
But with 46 states facing budget shortfalls it is clear that conservative orthodoxy is still alive and holding sway in too many statehouses. Too often, the emphasis isn't on change we can believe in -- but on the same old cutting of services that people need rather than raising taxes on the rich who have disproportionately benefited from fiscal policy over these many decades.
We certainly see this short-sighted and proven wrong approach being pushed in New York. The state is confronting a budget deficit of $15 billion, and Governor Paterson has proposed $9 billion of harsh cuts in education, healthcare and social services, and $5 billion in new taxes that would hit the struggling poor and middle-class the hardest -- making an already regressive tax system even more so.
The rest is worth a read. Check it out. |
