Cityroom is reporting that comedian Rush Limbaugh is bidding the Empire State adieu over the millionaire's tax:
Mr. Limbaugh also had harsh words for Mr. Paterson, calling his tax increases "stupid," and, according to The Huffington Post, saying they amounted to "punishing the achievers for the mistakes and the lack of discipline on the part of a bunch of corrupt politicians."
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Mr. Paterson said he was hardly sorry to see him go.
"If I knew that would be the result," he said after a speech Thursday morning in Midtown, "I would've thought about the taxes earlier."
In response to Mr. Limbaugh's departure, the New York Regional Manager of McDonalds announced that the chain would shutter 30 branches. Similar statements were echoed by executives of Burger King, Popeye's, and several pharmacies.
The State Senate has posted a full breakdown -- by budget area -- of the agreed to budget online. This a first, as far as I can tell. I suspect that Andrew Hoppin's Senate CIO team played a part in making this happen, though it's certain that it wouldn't be there without direction from the Senate Majority Leader. Definitely a step in the right direction.
Gov. David A. Paterson and legislative leaders on Monday defended their secretive negotiations and the eye-popping $131.8 billion budget they produced over the weekend, even as they warned that further deterioration in the economy could force them to return to the bargaining table in the coming months.
In a subdued appearance in the Capitol, Mr. Paterson, joined by Assembly Speaker Sheldon Silver and Senate Majority Leader Malcolm A. Smith, described the deal as a necessary consensus between cutting spending and finding new revenue in the face of a large, and continually growing, budget gap.
"I think that there's a balance now between taxes on higher incomes and taxes on everybody, so that there's a shared sacrifice," Mr. Paterson said. He also said that he might have to revisit cuts to services and so-called nuisance taxes - like levies on sugared sodas and downloaded songs - that he agreed to abandon in the new deal.
"I would like to tell you that this budget brings about the end of our fiscal crisis, but I can't do that; that would be intellectually dishonest," Mr. Paterson said. But the deal was an important step, he added. "We can see the light at the end of the tunnel."
But as outside analysts began poring over hundreds of pages of the budget, they said they saw little evidence of stern spending discipline, even in the face of a major recession. In closing a budget deficit that in the end surpassed $17 billion, lawmakers relied on billions of dollars in new taxes and fees, some of which may not even raise as much revenue as hoped if the economy continues to worsen. And like every Albany budget, whether in good years or bad, this one includes $170 million worth of what critics call pork-barrel spending for lawmakers' pet projects.
"The disappointment from the business community is that the Legislature doesn't seem to understand how serious this crisis is, and that it threatens our future," said Kathryn S. Wylde, president of the Partnership for New York City, a business trade group. "The response - of holding the state budget basically harmless - just doesn't fly with people who are cutting salaries, laying people off and aren't sure where their business is going."
Mr. Paterson and his staff appear to have won significant concessions from the health care sector by overhauling outdated Medicaid reimbursements, while shifting money away from expensive in-patient care to preventative care and clinics. Over time, officials said, that shift would save both operating costs and capital money.
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"What does the future hold? One way of looking at that is, New York - and every other state - are going to be in desperate straits if the federal stimulus money runs out in two years," said Robert B. Ward, deputy director of the Nelson A. Rockefeller Institute of Government, an Albany research organization. "It won't be long until the drumbeat starts to make this a longer-lasting enhancement of federal aid."
Mr. Silver, the powerful and cagey Assembly speaker, achieved what he wanted in the budget that emerged from the shadows of the statehouse this weekend, cementing his newfound role as the capital's center of gravity.
He won the policy fight, forcing Gov. David A. Paterson to raise taxes on the wealthiest New Yorkers, an idea that the governor decried as potentially disastrous three weeks ago. The $131.8 billion budget, which could hardly be called austere, is largely a reflection of the liberal tilt of Mr. Silver, and the Assembly's predilection for big spending on social programs, no matter the economic climate.
Mr. Silver also dictated the process, turning back the clock to the most secretive budget negotiations the capital has seen in years, casting aside the open government that Mr. Paterson and other Democrats once said would follow the party's sweeping victories in recent state elections. He argued that technicalities in recently passed budget reform legislation allowed the Legislature to circumvent requirements for open meetings among those negotiating the spending plan.
And the speaker preserved the Legislature's cherished spending on pet projects, pushing successfully for $170 million for members to dole out in district spending, leaving that pool of money essentially untouched, despite the fiscal crisis.
He argued that "nonprofit organizations throughout the state have been devastated by the economic downturn," but lawmakers appropriated money for gun clubs, churches, a yoga foundation and the Wantagh American Legion Pipe Band, among thousands of other projects.
Critics say Mr. Silver, a Democrat from the Lower East Side who has been speaker for the last 15 years, is the symbol of all that is broken in state government, a man who long ago forsook principle for power. They also say that he lacks the fiscal discipline to prudently manage the state's escalating future deficits.
Allies say he is the only senior Democrat in state government fielding a competent staff with the expertise to lead the state, and that he will usher in a more activist left-leaning agenda on important policy issues, like the recent agreement among state leaders to eliminate many of the remaining stringent Rockefeller era penalties for drug offenses.
New York's ruling Democratic triumvirate took a giant generational leap backward yesterday to the destructive days of John Lindsay, Abe Beame and Nelson Rockefeller.
The budget created by Gov. Paterson, Assembly Speaker Sheldon Silver and Senate Majority Leader Malcolm Smith is a monstrously bloated, tax-and-spend plan that, in one fell swoop, reverses a three-decade-long effort to strengthen business and prevent taxpayers from fleeing the state.
The wrecking ball of a new state budget, approved in Kremlin-like secrecy by the troika, also ranks as one of the biggest betrayals in process and substance by a governor in New York history.
The reform effort being reversed by Paterson & Co. began in 1975, when then-newly elected Democratic Gov. Hugh Carey, ending 16 years of Republican rule, famously declared that the "Days of Wine and Roses" were over.
Gov. David A. Paterson emerged from behind closed doors Monday to defend the state's newly proposed $131.8 billion budget, but business groups railed against its massive tax hike package as education and health care special interests complained it does not spend enough.
Critics of the 2009 budget rushed to the Capitol and flooded lawmakers' telephones to try to unravel support, especially those from upstate.
But Paterson, who in a session with reporters appeared to undermine some elements of the plan he had just negotiated, said there were few options for a government that saw its projected deficit leap by billions in just a couple weeks, to $17.7 billion.
"None of this makes sense," he said of a plan that imposes record tax increases and cuts many popular programs. But he said the choices were difficult and a "shared sacrifice" by all New Yorkers. "This is in response to a crisis," he said.
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But several Senate Democrats emerging from a caucus meeting said their 32-member coalition is holding steady and will back the budget despite GOP criticisms that it especially targets upstate for cuts and tax increases. With the GOP vowing to vote no, it would take only one Democrat to vote no, resulting in an unbreakable tie because the state has no lieutenant governor.
"We don't like the things that are in there," said Sen. William Stachowski, a Lake View Democrat. He said he would support the budget today. "We've never had to deal with a $17 billion budget hole," he said.
Governor David Paterson and the leaders of the Legislature have struck a deal to create two new tax brackets for those earning above $300,000 and $500,000. The new tax structure would raise an estimated $4 billion annually.
This is largely due to the work of State Senator Eric Schneiderman, the Working Families Party, and others who responded to the state's $15 billion budget deficit by asking the wealthy to pay their fair share and demanding an end to the injustice of people earning $20,000 per year paying the same tax rate as Bernie Madoff, Donald Trump and the hedge funders -- 6.85 percent. Assembly Speaker Sheldon Silver was instrumental in making progressive tax reform part of the final budget negotiations.
Initially, Gov. Paterson proposed the same tired conservative economic policy that has dominated the past thirty years--$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. No sacrifices for the wealthy. Although there are still cuts that will cause a lot of pain for working people and the poor, this budget will be vastly improved.
Dan Cantor, executive director of the Working Families Party, told the Times: "It's a profound breakthrough for tax fairness." In the perennial balancing act between a transformative politics aimed at a more humane and sustainable society, and the necessary compromises to begin addressing people's immediate needs, progressives have scored an important and timely victory.
Gov. David A. Paterson and leaders of the Legislature have reached a deal to temporarily raise taxes on New York's highest earners in order to close the state's yawning budget deficit, lawmakers and officials involved in the talks said on Saturday.
The new plan, which would expire after three years, would represent the largest state income tax increase in recent history, significantly larger than the surcharges imposed from 2003 to 2005, when the state last faced a major recession.
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Currently, New York's highest tax rate, 6.85 percent, kicks in for couples and joint filers making more than $40,000.
"It's a profound breakthrough for tax fairness," said Dan Cantor, executive director of the Working Families Party. "The era of phony prosperity has ended, and a new era of real shared sacrifice must begin."
Concluding the most secretive budget negotiations in recent memory, Gov. David A. Paterson and leaders of the Legislature outlined a $131.8 billion agreement on Sunday that would close the state's gaping deficit with billions of dollars in new taxes, financing from the federal stimulus and a substantial slowdown in the growth of health care spending.
The final days of negotiations between Mr. Paterson, Assembly Speaker Sheldon Silver and Senate Majority Leader Malcolm A. Smith have been conducted under a veil of secrecy so profound that even well-seasoned Albany cynics were taken aback.
And despite the enormous fiscal pressure the state faces, the budget contains $170 million in financing for pet projects - an amount unchanged from last year - suggesting that Albany's appetite for with what critics call pork-barrel spending appeared to be undiminished. Listed in the budget were grants to gun clubs, an upstate museum dedicated to bricks and brick-making, the Soccer Hall of Fame in Oneonta and an organization known as the Urban Yoga Foundation.
A lot of people would probably love to have the headaches of someone who earns more than $500,000 a year. But those headaches grew over the weekend with the announcement in Albany of new tax brackets for the highest earners. While there were no tears spilling into Champagne flutes over brunch on Sunday, there were voices of frustration among those facing higher payments to the State of New York
Jorge Colmenares, founder and owner of Miracol Energy, an investment firm in renewable energy, said that he earned more than $500,000 and that he was happy to do his part. But he wondered about the negative effects of higher taxes on consumers.
"If you continue to take away from people in the form of taxes, it is restricting them more in spending," he said while shopping on Madison Avenue. "On the one hand, I would agree: With the wealth that you can create, you should give back. But is the government using that money correctly? There's a lot of skepticism these days as to whether that's actually going to be the case."
Carmine A. Nicoletti, 51, of Great Neck, who owns a printing company in Queens, declined to state his income, but said that his household earned enough to fall into one of Gov. David A. Paterson's proposed tax brackets.
"I'm O.K. with it," he said of paying more taxes, while at Via Quadronno restaurant on the Upper East Side. "I'd rather pay my share if the economy is going to benefit. I mean, I don't like to pay taxes, but I don't mind if it helps my country. It shouldn't affect my family."
Julian N. Carter, 42, of the Upper East Side, said that he fell into the $500,000-and-higher tax bracket as a banker at Société Générale and that he supported the new tax.
"I'm absolutely in favor of it," he said outside the restaurant Frederick's Madison on Madison Avenue. "Listen, the reality is that someone has to pay the bill, and it has to come from taxes. You can't be selfish. My view is you have to redistribute."
Gov. Paterson and legislative leaders unveiled a record $131.8 billion tax-and-spend budget deal Sunday night.
Despite Paterson's repeated warnings about the state's fiscal crisis, total spending actually increases by $10.5 billion, or 8.7%, according to state leaders. The bulk of that, they say, is $7.2 billion in federal stimulus money that is required to be spent in the coming fiscal year.
The remainder includes $2 billion in spending cuts rejected by lawmakers as well as $1.3 billion in capital and debt service spending. Even without factoring in the stimulus money, state taxpayer-supported funding should grow by at least $800 million, Paterson's office said.
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Among those are vehicle registration fees, a cigar tax, a beer and wine tax, a utility assessment, an auto insurance surcharge, driver's license fees, a rental car tax and a registration fee for tobacco sellers. Bottled water drinkers will pay a nickel more because the drink has been added to the 5-cent bottle deposit law.
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After spending most of yesterday not commenting even on the size of the new spending package, Paterson, Assembly Speaker Sheldon Silver (D-Manhattan) and Senate Majority Leader Malcolm Smith (D-Queens) finally released the details Sunday evening.
To close a record two-year deficit of $17.7 billion, they say, the budget contains a combination of $5.2 billion in spending cuts, $5.2billion in new taxes, $1.1 billion in nonrecurring revenue and the use of $6.2billion in federal stimulus money.
They also say it increases state taxpayer-supported spending by just 1% for the fiscal year beginning Wednesday and reduces New York's long-term deficits 80%.
"We have produced a budget that provides a solid foundation to move forward and address challenges ahead," Paterson said. "We have accomplished this with a budget that holds government accountable to the people of New York, and protects those who cannot protect themselves."
Democratic leaders yesterday released details of a state budget deal that would push spending to a staggering $132 billion next year -- an increase of 10 percent -- while they ask residents to fork over a record-breaking $7.8 billion in taxes and fees.
The huge spending plan is $10.7 billion higher than the bare-bones plan Gov. Paterson released less than four months ago in a call for fiscal austerity.
It comes in the wake of a $4 billion soak-the-rich income-tax hike, the elimination of a $1.5 billion property-tax rebate plan, and $2.3 billion in new and extended business taxes and nuisance fees.
Among other things, the budget would add nickel deposits to bottled water, ratchet up taxes on beer and cigars, and raise income taxes at least 14.5 percent on families making more than $300,000 a year.
But Assembly Speaker Sheldon Silver (D-Manhattan) and Majority Leader Malcolm Smith (D-Queens) refused to give up even a dime of the notorious $170 million slush fund lawmakers use to dole out grants to favored nonprofits and community groups.
More than $6 billion in aid from Washington forestalled much of Paterson's proposed reductions to schools, hospitals, nursing homes and other health care institutions. But $6.5 billion in cuts and $4 billion from increasing taxes on the rich were required to close a two-year deficit of $17.7 billion.
The budget "closes the largest deficit in state history, stabilizes our finances and institutes critical reforms that will help eliminate waste and inefficiency in our government," Paterson said in a statement.
The plan boosts myriad taxes and fees on everything from driver's licenses to marine fishing licenses.
Still, elimination of the popular STAR rebate checks is sure to anger hard-pressed homeowners. The checks sent $1.4 billion back to taxpayers statewide - $370 million to Nassau and Suffolk residents - helping offset ever higher school levies.
The basic STAR and enhanced STAR exemptions - which reduce tax bills - are unaffected.
School taxes may rise in some districts despite the restoration of $1.1 billion in cuts proposed by Paterson. Superintendents said they were disappointed that education aid would grow by just $405 million, with the Island receiving 5 percent instead of its traditional 13 percent share.
The state's new, inflation-busting budget will require New Yorkers to pay more to go fishing and hunting, drive a car or motorcycle, have life insurance, operate the lights and heat in their homes, buy cigarettes, own a cell phone and drink beer, wine and bottled water.
Single taxpayers making more than $200,000 a year will see a jump in taxes, as will bus companies, nuclear plants, food processing companies, racehorse owners, farmers, pesticide applicators, grocery stores and anyone wanting to open a hospice.
In all, the total number of new taxes, fees and various assessments and surcharges will top $7 billion in the new budget that state lawmakers will vote on beginning Tuesday. The governor's office put the number at $5.3 billion, but that misses a number of levies.
The higher taxes will help pay for a budget that will soar to $131.8 billion-$10.7 billion more than what Gov. David A. Paterson proposed just three months ago. Federal bailout money accounts for two-thirds of that sharp increase, with the rest coming from new spending and debt.
The higher tax figures do not include the financial hit from some tax breaks being rescinded. Gone, for instance, are the annual STAR property tax rebate checks that arrive each fall right before Election Day. That will cost taxpayers $1.5 billion this year.
New York Magazine - Tax the Rich! How did the poor win the New York tax war? Welcome to the era of the moneyed underclass.
"It's not an easy time to defend the rich," says Kathryn Wylde, head of the Partnership for New York City. "In the current environment, with the anti-Wall Street sentiment, it's just politically unattractive."
Dan Cantor, who runs the labor-affiliated Working Families Party, gave his own diagnosis. "We just work much harder than the right-wingers. They think they can just do it by writing checks to the politicians. We don't have money. We have our passion."
That's not quite true. In Albany, the wealthiest and most well-connected groups often are representing the little guy. The teachers unions burn through $4 million a year on donations to state lawmakers and lobbying expenses, rivaling the outlays of the state's hospital associations, which also pressed for a tax hike.
Since December, the supporters of the rich tax-an alliance of organized labor and community-activist groups-waged a campaign that further weakened Governor Paterson. They spent millions on ads attacking him and staged feisty protests. (At one near City Hall last month, 1199 SEIU president George Gresham mocked his adversaries: "Where are the wealthy going to go? Iowa?")
Cantor says his party also banged on 72,000 doors, collecting over 12,000 "handwritten" notes calling on Albany to raise taxes.
At the last minute, real-estate and business trade groups pulled a long-dormant nonprofit group, Taxpayers for an Affordable NY, out of the mothballs. But it hasn't done much good. The deeper problem, says Real Estate Board head Steven Spinola, is that "the business community is not as monolithic as the unions."
It appears that deal has been reached to ask a bit more of those New Yorkers who can most afford it instead of balancing the state's budget on the backs of the poor and middle class. Liz has the scoop.
There is a tentative three-way deal on hiking the personal income tax on wealthy New Yorkers, multiple Democratic sources confirm.
The agreement - assuming it holds - sets up the following three tiers:
- $300,000 to $500,000: 7.97 percent.
- $500,000 to $1 million: 8.47 percent.
- $1 million and above: 8.97 percent.
This increase will sunset in five years.
The current top rate is 6.85 percent for those who make $40,000 and above.
I'd add the Working Families Party to the winners column along with the Assembly Democrats and I agree with Liz that the losers column includes The Governor, The Mayor and the Senate Majority Leader.
Good news from Albany. Hopefully this "tentative" deal will hold.
Unshackle Upstate's Brian Sampson is making the news circuit these last few weeks with the message that Fair Share Tax Reform would cause small businesses to fire workers (the Fair Share Tax Reform is making progress in Albany with bills that would create new NYS marginal tax brackets starting at $250,000). He says that 75% of small business owners pay taxes through personal income tax.
Ok, sounds like a reasonable concern, right?
Meanwhile, back in the reality-based community According to James Parrott, of the Fiscal Policy Institute, "only 1.4% of tax units with small business income were in the top two federal tax brackets, i.e., over $250K." The VAST majority of small business owners don't make that kind of money and therefore would never be subject to the Fair Share tax.
And let's think about Unshackle Upstate's logic for a minute. Imagine you are one of the rare group of small business owners netting over $250,000. The new Fair Share Tax Reform tax bracket costs you about $70 a week extra. Are you going to fire a worker to recoup that seventy bucks?
The good news is that Sampson's disingenuous media forays are the last gasps of a sinking trickle down theory. Wanna see a New Yorker laugh in your face? Tell them that tax breaks for the rich create jobs.
In many ways our current budget crisis, a crisis that seems to deepen by the hour, was always going to necessitate at least a modest increase in the income tax rate at the very top. There just isn't any way to close the gap without asking the New Yorkers who can most afford to pay, the same ones who have benefited most over the last decade or so while seeing their real tax liabilities decline, to endure a slight increase in their state income tax burden. Now, it looks as if that reality is finally taking root in Albany.
Democratic leaders in the State Senate will seek income tax increases on at least some affluent New Yorkers and a sales tax increase of a quarter of 1 percent to help balance the state budget, a Senate official with knowledge of the plans said in an interview over the weekend.
"The hole is too deep to dig ourselves out by cuts alone," said the Senate official, speaking on the condition of anonymity because the details of the proposal were still being hammered out. "The debate now is over where to start."
The move by Senate Democrats, who have a slim majority, will significantly increase pressure on Gov. David A. Paterson, who has said he would consider raising income taxes only as a last resort and only after the Legislature had agreed to steep cuts in state spending.
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The Senate official said discussion within the leadership had moved in recent days from whether such a tax was needed to what contours it would take.
Among the questions were the income level at which it would kick in, the amount of the tax and whether it would include a sunset provision.
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"It's better to tax the rich than crucify the poor," said Dan Cantor, executive director of the Working Families Party, a union-backed group that has lobbied aggressively for higher taxes on the wealthy to help close the state's $14 billion budget gap.
"The Senate is signaling that it needs to balance the budget in a balanced way, meaning smart cuts and fair taxes," Mr. Cantor said.
And while this move was in many ways always inevitable, the Working Families Party has helped greatly to bring it about by creating the space necessary to allow lawmakers to pull the trigger. As Crain's points out, their "outside game", as I like to call it, was key and it should be considered another rather large notch in their belt. It indeed was "textbook".
New York's chattering classes are no longer debating whether state income taxes will be jacked up on high earners. Now the only question is by how much. And the credit-or blame-for successfully framing the debate goes largely to a minor political party that's starting to have a major impact on state government.
The left-leaning Working Families Party has orchestrated a tax-reform campaign straight from the textbook of retail politics. Last week, it staged eight simultaneous rallies that drew nearly 100,000 people statewide, including 50,000 at City Hall. It has knocked on 42,000 doors, generating 7,000 handwritten letters to lawmakers. Radio advertisements saturate the airwaves in Albany. Its YouTube video "highlighting how easy the state's tax system is on millionaires," as a party spokesman put it, is being watched a thousand times a day.
"It certainly has made a difference," says Assemblyman Jonathan Bing, D-Manhattan, pointing to identical bills in the Assembly and Senate that would raise rates on people with adjusted gross incomes above $250,000.
It is not just the advocacy campaign, Mr. Bing says, but the Working Families Party's ability to oust incumbents that grabs legislators' attention. Indeed, the party campaigned relentlessly for months before last November's elections to evict state Senate veterans Serf Maltese and Caesar Trunzo, resulting in the Democratic takeover of the chamber. That, in turn, has made the tax increase achievable.
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"We haven't won anything yet, but I feel like we're winning the debate," says Mr. Cantor, who has run the party since its creation.
State Sen. Eric Schneiderman, D-Manhattan, who is carrying the bill in the Senate, says: "They've been moving public opinion. And they have been effectively reaching out to those of us in the Legislature to encourage us-to show that not only is this the right thing to do, it's the politically popular thing to do."
The opposition has been meek by comparison. A conservative political action committee, New Yorkers for Growth, started an online petition, and the Real Estate Board of New York put together a group called Taxpayers for an Affordable New York, which includes the Business Council of New York State. The latter group sent a mailing to 125,000 high-earning households and launched a Web site that has generated 1,000 e-mail messages to legislators.
And take note of a key part of WFP's campaign, something they haven't done much of in the past. They are finally using using new media tools to augment their already impressive ground game, and doing so with great success. The video mentioned above was a huge hit and the Fair Share Tax Reform site has been very, very successful.
The Fair Share site, meanwhile, has generated 25,000 e-mails in addition to arranging the rallies, letters, commercials and personal meetings with lawmakers.
"They have a system, a very powerful system, for raising money and taking over the airwaves," says Kenneth Adams, president of the business council. "Millions of average New Yorkers across the state don't have those systems-and frankly, neither does the business community-to mobilize to oppose this."
Mr. Schneiderman says the Fair Share campaign has tapped into the growing public sentiment that "the redistribution of wealth to the wealthy went too far." But Mr. McMahon says the Working Families Party and its allies have used "class warfare" to "create the illusion of a mass movement."
Here's what Mr. McMahon does not get: That video cost next to nothing to produce and was distributed for free via YouTube, not by "taking over the airwaves". It was spread virally (it was a big hit on twitter, for example) by folks sympathetic to its undeniable message. Anyone of those supposed "millions of average New Yorkers" could have done the same. They didn't.
It's also rather insulting to the 100,000 or so folks who rallied from one of the state to the other to refer to their movement as an "illusion". As for the "class warfare" swipe, one of the things that makes WFP's video so potent and poignant is that it very simply and effectively illustrates that there has indeed been class warfare engaged in for the last few decades. Guess who has been winning? It's certainly not those "millions of average New Yorkers". This is obvious to everyone when they learn that they pay their state income taxes at the same rate as Donald Trump and Bernie Madoff.
The big takeaway for me is that WFP's game is getting stronger by their embrace of these new tools. Now, they haven't abandoned the "inside game" by any stretch. Trust me, I'm sure they are bringing the heat to lawmakers personally as well. But, they've added new tools to further increase the effectiveness of their outside game. If they can fully integrate an effective new media communications strategy with their already formidable ground game, watch out. This may be but the first example of an even more robust combined effort on their part.
As Liz reported this morning, the so called "fun taxes", which seemed concocted largely to save time for folks writing attack ads on Governor Paterson next year, have largely been axed.
The soda tax (AKA the "fat tax"), which Paterson all-but declared dead not too long ago, despite a valiant YouTube defense mounted by DOH Commissioner Richard Daines, will now be officially confined to the recycling heap, along with the ever-unpopular "iPod" tax that would have applied to all digital downloads (including porn).
Also going: The plan to extend the sales tax to apply to "entertainment-related spending," which would have hit everything from gym memberships (an idea opponents noted runs counter to the administration's focus on preventative care and anti-obesity efforts) to circuses, movies and sporting events.
Paterson's call to increase beer and wine tax rates? Gone. The beauty and barbering tax? Gone. The cable TV tax? That's gone, too.
It seems that New York's cut of the federal stimulus bill has spared us all the burden of paying a tax on all manner of stuff. The taxes done away with today would have raised nearly $1.3 billion dollars. I'm not sure if the "tax tax", the $10 tax on those who file their state income tax on paper (seriously, Gov, what were you thinking?), met the same fate, but the Governor's office sent this release earlier today explaining themselves.
Governor David A. Paterson, Senate Majority Leader Malcolm Smith and Assembly Speaker Sheldon Silver today announced an agreement to eliminate $1.3 billion in tax increases included in the proposed 2009-10 Executive Budget. The agreement eliminates new taxes on common items, including previously tax-free goods and services such as clothing under $110, sugared drinks, digital downloads, cable and satellite television, manufacturers' coupons, haircuts, manicures, concerts, movies, live theatre, health clubs, bowling, golf, skiing and others. Additionally, to help businesses and families in a struggling real estate market, a proposal to limit the sales tax exemption on capital construction improvements made to property is no longer advanced.
"The proposed tax increases we are eliminating today were only put forward as a last resort when the deficit ballooned to an unprecedented level," said Governor Paterson. "Now that enhanced federal funding is available, our highest priority must be to provide targeted relief to those who need it most during this economic crisis - average New Yorkers struggling to make ends meet."
Senate Majority Leader Malcolm Smith said: "Taking these taxes off the table is a smart step forward in a budget process that should actually force government to do more with less. If implemented, these taxes would have impaired small businesses and adversely impacted middle income families. We have to take this opportunity to fundamentally restructure New York's budget to make government more efficient and more effective - and in this fiscal crisis, taxes should be the last thing we consider, not the first. Reducing the rate of growth in our spending while investing in job creation and sound economic development will put New York back on the road to economic recovery."
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A full list of taxes that will be eliminated from the proposed 2009-10 Executive Budget is included below:
Eliminate Proposed Restructuring of the Clothing Exemption. The Executive Budget would have eliminated the sales tax exemption for clothing and footwear priced under $110 and replaced it with two, one-week exemption periods for clothing and footwear priced under $500. This proposal is no longer recommended. (2009-10 Impact: $462 million, 2010-11 Impact: $660 million).
Eliminate Sales Tax on Non-diet Soft Drinks. The Executive Budget would have imposed an additional 18 percent rate of sales and compensating use taxes on fruit drinks that contain less than 70 percent natural fruit juice and non-diet soft drinks, sodas and beverages. This proposal is no longer recommended. (2009-10 Impact: $404 million, 2010-11 Impact: $539 million).
Eliminate Proposed Extension of Sales Tax to Cable and Satellite Television and Radio. The Executive Budget would have imposed sales tax on television and radio services provided by cable, satellite or other similar means. This proposal is no longer recommended. (2009-10 Impact: $136 million, 2010-11 Impact: $180 million).
Eliminate Proposed Limitation on the Capital Improvement Exemption. The Executive Budget would have limited the capital improvement exemption under the tax code to new construction, a new addition to existing construction, or complete reconstruction. This proposal is no longer recommended. (2009-10 Impact: $120 million, 2010-11 Impact: $160 million).
Eliminate Proposed Extension of Personal and Credit Services Sales Tax. The Executive Budget would have made personal services (such as beauty, barbering, manicure, pedicure, massage, health salon, or gymnasium services) and credit rating and reporting services subject to sales tax statewide. This proposal is no longer recommended. (2009-10 Impact: $78 million, 2010-11 Impact: $104 million).
Eliminate Proposed Extension of Sales Tax to Entertainment-Related Spending. The Executive Budget would have imposed a sales tax on entertainment-related consumer spending, including but not limited to, movie theaters, live theatre, concerts, golf, skiing, bowling and others. This proposal is no longer recommended. (2009-10 Impact: $53 million, 2010-11 Impact: $70 million).
Eliminate Proposed Digital Property Sales Tax. The Executive Budget would have imposed State and local sales tax on purchases of prewritten software, digital audio, audio-visual and text files, digital photographs, games and other electronically delivered entertainment services. This proposal is no longer recommended. (2009-10 Impact: $15 million, 2010-11 Impact: $20 million).
Eliminate Proposed Change in Coupon Taxation. The Executive Budget would have applied sales tax to the value of a store coupon used for a purchase. This proposal is no longer recommended. (2009-10 Impact: $3 million, 2010-11 Impact: $3 million).
So, thank you, feds. Thank you for saving us from the dreaded iPod tax and the porn tax and sugary saoda tax and the haircut tax and the bowling tax. Also, thank you for letting the Governor claim credit for "eliminating" these taxes before anyone ever paid them. Or something.
Do you pay the same tax rate as millionaires like Donald Trump and Bernie Madoff?
The answer may surprise you. The WFP hit the streets to see if New Yorkers knew just how little you have to make to be in the state's highest tax bracket.
Even while President Obama works to make America's taxes fairer, New York's tax code is anything but. Over the last 30 years, the rich have seen their state taxes cut in half. Today, janitors and cab drivers pay the same state tax rate as Wall Street bankers.
It's not just unfair--with the state facing a $14 billion budget gap and devastating cuts to hospitals and nursing homes, it's madness.
A group of powerful business organizations is preparing to fight a proposed "millionaire's tax" they say will drive affluent New Yorkers out of state.
Taxpayers for an Affordable NY includes the Business Council of New York, the Real Estate Board of New York, and the Rent Stabilization Association - a trio of groups that came together once before, in the early 1990s, to fight property tax hikes.
Taxpayers for an Affordable New York, an astroturf org, has even mailed out 150,000 of the mailers you see at the right. The mailers and the website are so full of BS and distortions as to be almost comical. Of course, we're talking about real people and a fiscal crisis that is all too real. There's nothing, not a damn thing, funny about it.
The Working Families Party believes that you are not paying your fair share and they are pressuring your State Senator to increase your income taxes. Amazingly, despite what we have learned these past months, they want New York to continue to spend more then it has and they want you to pay for it. They call it a "millionaire tax" even though the taxes of every family with an income of more than a couple of hundred thousand dollars could be raised by 20 to 50 percent.
Governor David Paterson has said "My belief is (that raising income taxes) is an almost automatic formula for losing population in the state and losing job creation."
Mayor Michael Bloomberg called this plan a "crazy idea". He said "You can't tax people who can move... the city would end up losing its tax base."
Families that earn more than $200,000 comprise only 4% of taxpayers but they pay 54% of the taxes. It seems to us that you already pay your "Fair Share".
If you read this site regularly, you are probably fairly familiar with what the Fair Share tax Reform Act does and what it does not. Take a look at the copy above and count the falsehoods.
So that's a good measure of the momentum building behind the proposal. The fat cats are mobilizing and using all the usual tools to spread fear and disinformation.
It is said that democracy is the worst form of government - except for all the others. You could say the same thing about the "millionaire's tax" - it's the worst solution to our budget crisis, except for all the others.
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More than three quarters of the governor's cuts come from just two areas: health care and education. Is that because Gov. Paterson hates kids and sick people? Of course not. But that's where the money is.
Two-thirds of every dollar our state spends is on schools and hospitals, and much of the remainder (like debt service) can't be reduced. So anyone trying to close the budget gap through cuts would end up doing the same thing.
What about revenues, then? Raising the sales tax hurts the people who can afford it the least - working New Yorkers who spend every dollar they earn on the essentials - not to mention local businesses.
And let's not even get started on raising property taxes - which the governor is proposing through the back door, by cutting aid to local governments.
So what does that leave? If we want to keep our schools and hospitals open, and we can't tax working people any more, there's just the one option the governor has so far seemed unwilling to consider - raising the state income tax. Not for working families, but for those with incomes in the hundreds of thousands who can most afford it.
After all, they're the ones who have enjoyed most of the gains from our winner-take-all economy, and they're the ones who got most of the big tax cuts pushed through by both parties in Pataki-era past. (And some of them, like those whose big checks came from Goldman Sachs or Citigroup, also bear more than their share of blame for getting us into this mess.)
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A painless fix? No - but it's better than shuttered hospitals and laid-off teachers.
The good news is that most New Yorkers seem to agree. Public opinion polls show that a majority of New Yorkers support raising taxes on the wealthy along the lines of the Fair Share Tax Reform plan to help close the budget gap and prevent the governor's cuts.
Believe us, no one likes taxes. But sometimes, raising taxes on those who can afford it is the least-bad option we've got.
Leaders of a network of shelters for Suffolk's homeless veterans say they would have to close if forced to bear a proportional share of budget cuts proposed by Gov. David A. Paterson.
Suffolk County United Veterans, whose eight shelters provide housing and counseling services to 60 homeless veterans per day on a budget of $400,000 per year, say such a cut would carve about $96,000 from their annual spending.
"Those funds are our life support," said Wilkens Young, the organization's director.
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Advocates of the shelters say cuts to homeless services would place an undue burden on troubled veterans just as war in Iraq and Afghanistan is increasing their numbers.
"We're in a war and they are coming back home," said Suffolk Legis. Kate Browning, (WF, Third District) whose son is headed for his third deployment this month. "This is not the time to cut these funds."
Browning said Albany should consider alternatives to cuts she says tilt against some of society's most vulnerable populations.
Kate Browning is completely correct here. This absolutely not the time to be cutting these funds and programs.
I very much hope that some federal money can be found to avoid these cuts. Regardless, balancing the budget on the backs of homeless vets is shameful.
Gov. David Paterson calls for shared sacrifice in tough times. My friends and neighbors have already been sacrificing for years. Stagnant wages, rising health care costs, rising utility costs, mass layoffs in manufacturing jobs - this is our reality.
Sacrifices in our world can mean untreated illnesses, unheated homes, evictions, deferred dreams for higher education. I can only imagine what a millionaire would be required to sacrifice with small or moderate personal income tax increases - but I'd love to have her come to my neighborhood, look us in the eyes, and explain why it's too painful.
Finally, the governor continues to repeat the ideological mantra that tax increases for the wealthy are bad for the economy. According to Nobel Prize-winning economist Joseph Stiglitz, spending cuts are far more damaging to an economy in recession than are tax increases for the wealthy.
A new poll out this morning from Quinnipiac University shows that New Yorkers support an state income tax increase on those making over a million dollars a year by a factor of 4 to 1. There is support for such an increase across the political spectrum as well with healthy majorities of Republicans, Democrats and independents.
By a 79 - 18 percent margin, New York State voters support a so-called 'Millionaires Tax,' a higher state income tax rate on people making more than $1 million a year, according to a Quinnipiac University poll released today.
Support for the higher tax sweeps across the political spectrum, 62 - 32 percent among Republicans, 91 - 7 percent among Democrats and 81 - 17 percent among independents, the independent Quinnipiac University poll finds.
Support softens somewhat the lower the threshold for an increase becomes.
Support drops slightly to 72 - 25 percent when the threshold for the higher tax rate is dropped to $500,000. Support drops further to 56 - 40 percent when the target number is set at $250,000. At this $250,000 target, Republicans switch to 60 - 37 percent opposed, while the lower number wins 67 - 29 percent support among Democrats and 59 - 38 percent support among independent voters.
Also, though New Yorkers overwhelmingly favor an modest increase in the rate paid by the wealthiest of us, they say they also would cut spending before "raising taxes".
Despite support for the Millionaires Tax, voters say 51 - 34 percent that they would rather cut state services than raise taxes.
Of course, this might have something with the way the question is posed.
41. To balance the state budget, if you had to choose, would you prefer - raising taxes or cutting government programs and services?
I'd have loved to see the question posed this way: "To balance the state budget, if you had to chose, would you prefer - cutting government programs and services or raising taxes on the wealthiest New Yorkers?"
I suspect those numbers would look rather different.
In other news from the poll, most New Yorkers believe the budget crisis is for real, most of them disapprove of the way the Governor is handling the crisis and almost no one believes the legislature is courageous enough to do anything about it.
New York State's budget problems are "very serious," 69 percent of voters say, while 26 percent say they are "somewhat serious."
But only 18 percent of voters say the State Legislature has the political courage to make unpopular budget decisions, while 74 percent says it will be "business as usual in Albany."
Voters disapprove 45 - 36 percent of the way Gov. David Paterson is handling the state budget. Voters split 45 - 45 percent on whether TV commercials attacking Gov. Paterson for proposals to cut health care are fair or unfair.
"Business as usual in Albany?" We're about to find out.
Gov. David A. Paterson Tuesday threatened to veto a millionaires' tax unless lawmakers first cut billions of dollars in spending.
He said he would oppose increasing the personal income tax on the wealthy in order to sustain the current level of state spending. "What we are trying to do here is get rid of the addiction to spending that is just abounding in this Capitol and get ourselves on the road to fiscal discipline," he told reporters after a speech to the state Association of Counties.
Asked if he would veto a hike in taxes on the wealthy, Paterson said, "I think I would if there was the type of tax increase that was just designed to recreate spending."
He added that lawmakers first must agree to $11.2 billion in spending cuts in the 2009-10 budget before considering more broad-based taxes.
"If what I'm seeing is?taxes to bring back programs that we think we need to cut, I'm going to stop it."
Gov. Paterson suggested Tuesday he may veto any plan to hike taxes on the wealthy.
"Everybody is trying to find a way that they can keep spending," Paterson complained. "If people think that they are going to create a false economy here by raising taxes ... I am just not going to support this."
Asked specifically if he would veto an income tax hike, Paterson said, "I think I would if there was the type of tax increase that was just designed to re-create spending."
But, in typical Paterson style, he hedged shortly afterward.
"I didn't say that I would veto an income tax hike for all time," the governor said.
Governor David Paterson has given conditional backing to a plan to increase taxes on the wealthiest New Yorkers, but he says the legislature will have to prove they can make deep spending cuts first.
Governor Paterson gave his strongest signal yet that he might sign on to a plan to increase income taxes on the state's richest residents. Paterson, who has said for months that raising income taxes should be last resort, now says he'll consider a proposal that's gaining support in the legislature if lawmakers agree to some serious spending cuts first.
"If I see real spending cuts that really address this problem, and if our deficit goes beyond it, well then we're at a point when our backs are against the wall," said Paterson, who said he might consider raising the income taxes on the wealthy then.
At the same time, in a seemingly contradictory statement, the governor threatened to veto a tax hike bill, if the legislature doesn't implement cuts to his satisfaction.
Gov. David Paterson warned state lawmakers Tuesday not to raise income taxes on the wealthy or use federal stimulus aid to restore budget cuts, suggesting he may veto attempts to boost state spending.
Paterson first indicated that he would veto a plan by the Democratic-controlled Legislature to increase taxes on the wealthy, but then said a tax increase couldn't be ruled out if the state's finances were to worsen.
"If I see real spending cuts that really address this problem, and if our deficit goes beyond it, well then, we are at a point where our backs are against the wall" and income taxes could be increased, he said.
Among the bill's supporters, there is a sense that they face considerable - but not necessarily insurmountable - skepticism from Senate Democrats.
"By introducing this bill, we are opening the conversation," said Senator Eric T. Schneiderman, a Democrat who represents parts of the Upper West Side and the Bronx and is the bill's lead sponsor. "But this is an issue that gathers support the longer people think about it."
Called the Fair Share Tax Reform Act of 2009, the plan laid out in Mr. Schneiderman's bill is an expanded version of the so-called millionaires' tax the Assembly passed last year. It would create three new tax brackets at the highest end of the state's income tax scale and apply to taxable income, not gross income.
"While Governor Paterson continues to ask everyone except the wealthy to contribute to closing the state's budget gap, the Fair Share Tax Reform Act introduced by 18 Senators today strikes a bold note for fairness and true shared sacrifice.
The Act would raise $6 billion in desperately needed revenue for New York, helping to offset some of the Governor's proposed devastating cuts to students, the elderly, and the disabled. Fair Share Tax Reform does so by asking the very richest New Yorkers to pay their fair share in taxes by giving back some of the generous tax cuts they've been lucky enough to receive.
As Congress continues to debate the federal stimulus package, hundreds of economists have warned that Gov. Paterson's proposed cuts could slow economic activity and sink New York deeper into recession.
Their take: raising taxes on those who can most afford to pay is not only the fairest solution, it is the one that will put New York fastest on the road to recovery.
As the devastation to schools, hospitals, libraries, public transportation and hundreds of other essential public programs the Governor has proposed becomes clear, it is no wonder that poll after poll shows the vast majority of New Yorkers support asking the wealthy to pay their fair share.
Karen Scharff of Citizen Action:
"The question comes down to whether we should ask wealthy New Yorkers to pay a small amount in additional taxes to protect average New Yorkers facing job losses, foreclosures, school cuts and property tax increases," said Karen Scharff, Citizen Action Executive Director. "The proposed state cuts in programs like education and health care will have a devastating impact on the quality of life for all New Yorkers unless the state raises significant new revenue."
Currently, every New Yorker who earns more than $40,000 pays the same marginal tax rate of 6.85%. The "Fair Share Tax Reform" bill, introduced today by Eric Schneiderman and other Senators from across the state, would reverse a 30-year pattern of reducing taxes on the wealthiest New Yorkers by creating new income brackets for individuals or families making more than $250,000, $500,000 and $1,000,000.
"It's much fairer to ask a person making $300,000 per year to give up the cost of a high-end dinner in midtown Manhattan than to layoff teachers at public schools in his neighborhood, forcing children into larger classes," said Scharff. "The state budget deficit is forcing our state leaders to decide whether our priority is protecting wealthy New Yorkers who can easily afford a bit more in taxes, or working families who depend on basic services like education and health care."
More as they come in. In the meantime, this looks to be a perfect opportunity for folks to get in touch with their Senators. Ask them if they are a sponsor of the bill. If they aren't, ask them why not.
That's a serious question. You can say many things about Governor Paterson, but you certainly can not call him dumb. In fact, he's pretty smart guy. One doesn't find oneself as the blind African American governor of a major state like New York because they are stupid.
Gov. Paterson yesterday warned that the politically popular plan to impose higher income taxes on the wealthy would cost New York jobs and drive people out of the state.
"What I'm saying is if you tax the rich right now, while the economy is disintegrating, you're going to lose jobs and you're also going to lose from the tax base as people leave the state," Paterson told reporters after addressing the Council on Foreign Relations.
"In my opinion, you're [compounding] the problem, not eradicating it. I don't think that taxing the rich is the best way to go right now."
Where to start? After the 9/11 attacks, the state levied a very modest increase in the state income tax rates of the wealthiest New Yorkers. Not only did those wealthy few not "leave the state," there were more people in that bracket at the end of the temporary increase than when the increase was introduced. The "tax base" the governor references above increased, not decreased as he threatened at the CFR yesterday. These scary talking points have no basis in fact. They are myths. They are falsehoods. They are complete and utter bullshit.
Not only that, but the benefits from a very modest increase on the state's wealthiest are actually based in, ya know, fact. Last year over 100 of New York's leading economists (and we have some of the finest in the world here in the Empire State) sent a letter (pdf) to the governor explaining these benefits. They very simply made the case that such an increase was not only economically preferable, but also much more fair to everyone.
We are concerned, however, that steep state budget cuts will exacerbate the economic downturn and harm vulnerable low- and moderate-income New Yorkers. Constrained by a balanced budget imperative, states face only difficult choices in balancing their budgets during recessions. Economic theory and historical experience gives a clear and unambiguous answer: it is economically preferable to raise taxes on those with high incomes than to cut state expenditures.
The reasoning is straightforward: in a recession, you want to raise (or not decrease) the level of total spending-by households, businesses and government-in the economy. That keeps people employed and buying things, and makes it more likely that businesses will want to invest to serve that consumer demand. Budget cuts reduce the level of total spending. Raising taxes on high income households also will reduce spending, but by much less than the amount of the tax increase since those with plenty of income typically spend only a fraction of their income.
The economics of our current situation dictate that a slight increase at the top is preferable to deeper cuts in spending. Simple fairness also dictates that the burdens of these tough economic times be spread amongst all of us. The political climate in which a rather large majority of New Yorkers support such an increase would seem to suggest that the governor is on the wrong side of public opinion.
So why is Governor Paterson digging in his heels here and why is defending his stance with demonstrably false arguments?
If you are opposed to spreading the burden of closing this massive hole in the state's budget amongst all New Yorkers, not just the poor and middle class, then make the case on the merits so far as you can muster them, but do not, under any circumstances, continue to blow discredited right wing smoke up our ass.
