by Jon Greenbaum

Governor Paterson is once again proposing large cuts to education.

It isn’t necessary.

The state could pick up over $3 billion dollars merely by holding on to just a portion of the stock transfer tax. New York used to collect 100% of the tax but Albany started to hand back 30% of the revenue to Wall Street back in 1979 and then doubled the revenue giveback the next year and by 1981 Wall Street didn’t have to pay a nickel. However, if we dial the tax break back to 1979 and hold on to just 30% of the stock transfer tax we’re looking at $3.2 billion in extra revenue.

Albany has left billions of dollars on the table in other ways. The Better Budget Coalition runs down the possibilities here.

Right now there is a coordinated campaign to scapegoat public employees and blame the state workers for the budget crisis. Not surprisingly, the attack on state workers is being generated by the CEOs over at the Business Council of NY (whose executive board includes Kevin Burke, CEO, Con Edison, David H. Klein, CEO, Excellus BlueCross BlueShield and Paul Speranza, Vice Chairman, Wegmans). By going after state workers they weaken the public sector unions who provide the strongest countervailing force in Albany against the Wall Street special interests. Their party line goes something like this, “The state budget is going up faster than the rate of inflation and in the midst of this crisis the state workers are getting raises! These folks should share in the sacrifice. It’s time to slash funding for state services and freeze wages.”

Let’s put things in perspective – the Masters of the Universe on the payroll at Goldman Sachs (yes, the folks who recklessly gambled away the entire world economy by peddling CDOs and making side bets with CDSs) just pulled down more than twice as much in bonuses than the entire NYS deficit. Secondly, reductionist hand wringing about how the NYS budget has grown faster than inflation misses the point of how the NYS economy actually functions. The reality is that NY’s budget has been growing slower than the state GDP. And finally, not that reality matters to these conservatives, but the state is actually paying out less (in real dollars) to state workers than it was twenty years ago. So let’s not get suckered by the rhetoric coming from the Chamber of Commerce types. Let’s just make sure our children have what they need to succeed in school. ?

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At the Rochester Town Hall meeting person after person asked the Governor about the budget cuts. The community is appalled at the impact of these cuts on the programs that we rely on.

The Governor has a choice. He can either cut programs or raise revenue. Going against the advice of dozens of economists (including two Nobel laureates and President Obama’s budget director), Paterson has chosen, in the middle of a recession, to handout pink slips to NYers and cut the programs that help NYers keep their heads above water.

Why is the Governor protecting the wealthiest 4%?

The wealthiest New Yorkers have enjoyed seeing their tax rate cut in half over the past 30 years. NY’s income tax brackets don’t extend past 20 grand (so whether you make $20,000 or $2 million you still pay the same rate). In fact when you add up property taxes (ouch!) and sales taxes you end up paying MORE of your income in taxes than Donald Trump.

So why is the Governor protecting the smallest special interest group in the state (the very wealthy)?

Is it that they contribute to his campaigns?

He says that the wealthy will leave NY and take jobs with them.

Hmmm.. Let’s see, giving the wealthy tax breaks will help create jobs. Where have we heard that before?

Will the wealthy leave NY if we raise their income tax? Boy, it would be good if we had some hard data in order to assess that possibility.

Oh, wait we do.

In 2003 NYS temporarily raised the income tax on the wealthiest 2% and their ranks actually grew. More rich people flocked to NY than got on a plane for Florida.

Same thing happened in NJ when they raised their income taxes on the wealthy. Princeton actually did a study on it. http://www.princeton.edu/prior/PRIOReconomy-Final-(2).pdf.

Turns out the wealthy stick around where there are some cool lifestyles. And it turns out NY is pretty cool. And it turns out businesses make decisions about where to locate based on a bunch of things like the education of the workforce and access to markets and energy costs and stuff like that. Taxes are WAY down the list of considerations.

At the Town Hall Forum Paterson told the liquor store owners that he is basing his decision on the data and if they had contrary data he would look at it.

Well, the data is in and myth about millionaires fleeing is officially debunked. Does the Governor have some other data or is this just some cynical political ploy?

Stop protecting the wealthy from paying their fair share. They earn the vast majority of NY’s income. If there were 100 random NYers in a room, the wealthiest 5 people in that room would earn about as much as the other 95 combined. It’s time for the state to stop coddling these folks and require them to step up and kick in their fair share.

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