Smith Slapped Over Tax Cap

The Working Families Party is not reserving its criticism over the proposed property tax cap solely to Gov. David Paterson.

The labor-backed party is also upset with another of its Democratic allies, Senate Minority Leader Malcolm Smith, for his recent announcement that he not only supports the cap, but wants it to be lower than even Paterson has proposed (2 percent rather than 4).

The minority leader’s move also shocked members of his Democratic conference who were angry Smith got out in front of them on a subject on which they have yet to take a formal position.

The WFP took Smith to task in a June 17 e-mail that also mentions the party’s displeasure with his failure to join Assembly Speaker Sheldon Silver in supporting the so-called “millionaire’s tax.”

The WFP has proposed a property tax plan that would provide relief to low and moderate-income families through a circuit breaker funded by increasing the personal income tax for wealthy New Yorkers.

“…We acknowledge that you have not supported our proposal in favor of the high-end PIT increases as a way to pay for property tax relief and other needed spending,” WFP Co-Chairs Bertha Lewis and Bob Master wrote to Smith. “You were clear on this at our State Committee Meeting in March, and again at your interview with the WFP Executive Committee on May 30th.”

“At the Executive Committee meeting in May, you once again, reiterated your differences with the WFP on the property tax/income tax issues.”

“But we were heartened to hear of both your openness to our continuing individual conversations with conference members about tax issues in preparation for next year (and now a willingness to have us present to the full Conference), and of your forthright opposition to the tax cap. ‘I’ve got a real problem with the hard cap,’ you said, and we were relieved to hear you speak so clearly about this.”

“To then read that you have changed your mind entirely less than two weeks later is distressing, to say the least. In a few short months you will likely be the leader of the Senate Majority. The WFP is deeply committed to making the Democrats the Majority Party in the Senate, and we would be surprised if you have other organizational partners already deploying scores of people on the doors in May in the key Senate districts.”

“But our enthusiasm for this work is dampened when we read stories like the one by the AP, and we would very much like you to clarify your position.”

June 17, 2008

Honorable Malcolm Smith
Capitol Building
Albany, New York

Dear Senator Smith:

We write to express our deep disappointment in the comments attributed to you in the Associated Press and elsewhere on the topic of the “hard tax cap” currently being promoted by the Suozzi Commission and Governor Paterson.

There are two reasons for our dismay.

First, we think that the tax cap proposal is ill-conceived, and we are shocked that you would endorse not just the 4% cap but an even harsher 2% version. We firmly believe that such a stark approach to public finance will cause substantially more harm than good (see California Proposition 13 and its impact on the California public school system). As you well know, we strongly favor providing genuine property tax relief to working- and middle-class New Yorkers, and like most economists and policy analysts believe that the best way to do so is via a robust “circuit breaker.” We believe further that the circuit breaker must be accompanied by adequate school aid funded with a high end PIT increase. The Governor’s unfortunate embrace of the tax cap only helps to reinforce a political perspective which has been used to undermine both fair taxes and public services, and the WFP was formed in order to advance both. We really do believe in the “Tax Fairly, Spend Wisely” approach to governance.

Attached to this letter are two documents that we urge you to review. The first, called “Righting the Balance,” attempts to put the entire tax system in context. The second is a letter to the Governor from two Special Advisors to the Suozzi Commission (Lisa Donner and Karen Scharff), who offer their reasons for dissenting from the Commission’s recommendation.

Taken together, these documents lay out both why we favor substantial reductions in property taxes via a circuit-breaker, and the case for high-end PIT increases. The notion that a $42,000 a year saleswoman or subway motorman pays the same tax rate as the $420,000 per year advertising executive or the $4.2 million per year Wall Streeter is wrong, and we can’t believe you disagree. The relentless shrinking of a strong middle-class may be the greatest failure of our economy over the last 25 years, and its restoration will require a commitment to more rather than less income equality. It took decades of struggle and leadership to produce policies that favored the “ordinary” citizen over the wealthy, and those policies have been under constant attack almost from their inception. Too often over the last few decades, tax proposals masquerading as middle class tax relief but in fact almost entirely benefiting the wealthy have been enacted, usually by Republican controlled legislatures but sometimes with Democratic help. Needless to say, we count on the Senate Democrats, under your leadership, to stand with the middle and working class, not the wealthy.

At the same time, we acknowledge that you have not supported our proposal in favor of the high-end PIT increases as a way to pay for property tax relief and other needed spending. You were clear on this at our State Committee Meeting in March, and again at your interview with the WFP Executive Committee on May 30th. At the March meeting, you stood before 300 grassroots leaders of the WFP from across the state and argued for a more patient approach: we didn’t agree, but you made your case well and in so doing deepened the respect we have for your leadership. Indeed, your Conference Members exhibited great discipline throughout the spring, with very little wavering from your approach whatever their personal beliefs. They were following your leadership, and as organizers we respect that.

At the Executive Committee meeting in May, you once again, reiterated your differences with the WFP on the property tax/income tax issues. But we were heartened to hear of both your openness to our continuing individual conversations with conference members about tax issues in preparation for next year (and now a willingness to have us present to the full Conference), and of your forthright opposition to the tax cap. “I’ve got a real problem with the hard cap,” you said, and we were relieved to hear you speak so clearly about this.

To then read that you have changed your mind entirely less than two weeks later is distressing, to say the least. In a few short months you will likely be the leader of the Senate Majority. The WFP is deeply committed to making the Democrats the Majority Party in the Senate, and we would be surprised if you have other organizational partners already deploying scores of people on the doors in May in the key Senate districts. But our enthusiasm for this work is dampened when we read stories like the one by the AP, and we would very much like you to clarify your position.

We look forward to meeting with your Conference on June 23rd and to probing more deeply into the tax questions then. But we felt it was important to let you and the other members of the Conference who are running with the WFP’s backing know immediately how strongly we feel about these latest developments. We look forward to continuing this dialogue.

Sincerely,

Bertha Lewis, Bob Master, Sam Williams
Co-Chairs

Dan Cantor
Executive Director

Cc: D-WF Senate Nominees