When Is A Tax Cut Not A Tax Cut?
The overhaul of the state’s tax code last December was something of a political Rorschach test.
Liberals saw it a tax increase, a preservation of the so-called millionaires tax they had been under pressure to at least partially keep.
Conservatives saw it as a tax cut, in part because it created several new tax rates that were lower than what most were paying.
What the overhaul did was work toward plugging a roughly $10 billion deficit by raising $1.9 billion that wasn’t initially in the cards because of an expiring tax rate increase for high income earners (it’s incorrectly referred to as a “millionaires tax” because it impacted those making $200,000 and more).
E.J. McMahon of the fiscally conservative Empire Center notes that Republican Sen. Tom Libous in his campaign ad may claim this was the largest “middle-class tax cut” in several generations, but that’s not entirely true.
Libous cooperated with Cuomo, all right, but the senator’s characterization of the tax cut is simply not accurate. Last December’s tax package — which expires at the end of 2014 and which, on a net basis, raised income tax revenues by almost $1.9 billion — did not deliver the largest middle-class tax cut in 58, or 38, or 28, or even just eight years. By historical standards, the bill’s marginal rate cuts for lower brackets were not especially “large” at all. In percentage terms, they were among the smallest income tax cuts to have been enacted by New York since the state began a concerted effort to reduce marginal rates in the late 1970s.
Senate Republicans, natually, don’t like this line of thinking from McMahon as noted by Gannett.
“It’s absolutely true that last year’s tax relief package means that middle-class families now pay their lowest tax rates in 58 years,” said Senate Republicans’ spokesman Scott Reif. “Rather than take gratuitous shots, we would expect E.J. to be a bit happier now that Senate Republicans are cutting taxes, not raising taxes by $14 billion as Democrats did when they were in the majority.”
For what it’s worth, as Gov. Andrew Cuomo’s press office sought to push back against the claims from The New York Times and others that it was colluding with the wealthy coalition of business groups and privat-sector unions known as the Committee to Save New York, Communications Director Rich Bamberger said the tax overhaul was firmly a tax hike on the wealthy.
Bamberger wrote at the time that groups associated with CSNY “opposed any continuation of the tax on high-income earners known as the Millionaire’s Tax; Governor Cuomo crafted and got passed a progressive taxation plan that included taxes on such high-earners rather than just allowing the Millionaires tax to expire.”
Cuomo, along with the Democratic-led Assembly and Republican-controlled Senate claimed that they closed the deficit last year without raising taxes, though the overhaul measure did create some new revenue tat wasn’t initially counted on.
H/t PolHud and Gannett for flagging the McMahon post.
|Print article||This entry was posted by Nick Reisman on September 21, 2012 at 11:25 am, and is filed under NYS Budget. Follow any responses to this post through RSS 2.0. Both comments and pings are currently closed.|