Archive for January, 2009

BALCONY Joins Coalition to “Keep New York Working”

WAMC Photo by Dave Lucas

Broad coalition of labor, business, civic and environmental groups launch aggressive campaign in Albany to “Keep New York Working”

Advertising and Lobbying Efforts to Ramp up as Coalition to Keep New York Working Pushes for $12 Billion Stimulus Plan to Save 435,000 Jobs while Improving State’s Infrastructure

Group Unveils Specific “Shovel-Ready” Projects in Regions Across State

The Coalition to Keep New York Working, a group of top labor, business, civic and environmental organizations from across New York, today continued their push for a $12 billion New York State stimulus package by announcing they would embark on an aggressive advertising and lobbying campaign aimed at state lawmakers and unveiling a list of specific shovel-ready infrastructure projects they said would help jump start the state economy.

Read the complete press release: Keep New York Working

Lighten weight of tax burden

By JAMES PARROTT
First published: Tuesday, January 27, 2009

Both fairness and sound economics should play a role in closing New York’s budget gap.
Gov. David Paterson’s budget proposal shows that the top 5 percent of New York taxpayers had 59 percent of all income in the state in 2006. That’s one and a half times the combined income of everyone else. However, if you put this together with the income numbers from 2002, and with the budget’s projections for 2009, a curious picture emerges.

Even allowing for some slippage in high incomes in the recession, all of the income growth between 2002 and 2009 will go to the wealthiest 5 percent. The other 95 percent of households taken together will have about the same income this year as in 2002 (and that’s without adjusting for inflation.) The incomes of the top 5 percent will have doubled over that period. That’s a $200 billion income gain.

That’s a staggering set of figures, even to those of us who have been shining a spotlight on income polarization for years. No income growth for 95 percent, double for a handful.

This picture is particularly curious because, when it comes to tightening our belts in the recession, the governor’s budget has all of the tightening done by the 95 percent, sparing the one in 20 at the very top of New York’s economic pyramid.

The economic carnage hits harder at those with modest incomes and those losing their homes and/or jobs and/or retirement savings than at those whose incomes may fall from $3 million to $2 million.

Asking the top 5 percent — or maybe just the top 3.5 percent with incomes over $250,000 — to pay a slightly higher rate on their state income taxes seems like a reasonable way to share the sacrifice that’s being exacted by a damaged economy and a tighter budget.

It would also be a step in the direction of restoring fairness to New York’s graduated income tax, which has become significantly less graduated over the years. Today, New York’s middle- and lower-income households pay a higher share of their incomes in state and local taxes than the top 1 percent or top 5 percent.

Will higher earners desert New York if their taxes are raised? They didn’t after 2003 when the state (and New York City) instituted higher tax brackets at the top. (Those increases expired in 2005.)

Similarly, a Princeton University study showed that an increase in New Jersey’s top income tax rate in 2004 did not adversely affect the number of high earners choosing to live there.

There is a very good chance that President Barack Obama’s stimulus package will include significant fiscal relief to New York and all states. However, federal aid alone will not stave off all of the proposed service cuts that could worsen the New York economy.

The state needs to do its share as well. One hundred and twenty economists from across the state wrote to the governor last month telling him the right answer: “economic theory and historical experience (shows) it is economically preferable to raise taxes on those with high incomes than to cut state expenditures.” New York, which unlike the federal government has to balance its budget, doesn’t have a perfect set of choices. In a recession, it’s not ideal either to raise taxes or to cut services. But high earners typically spend only a fraction of their income in any given year, saving the rest. On the other hand, state spending employs workers, provides services and puts money in the hands of New Yorkers in need — all of which put money in circulation, priming the economic pump.

The Legislature should use any federal aid to trim the proposed budget cuts as much as possible. That’s the idea behind the stimulus. To further trim the remainder, we should modestly raise taxes, restoring progressivity to the state’s graduated income tax, and minimizing harm to an already damaged economy.

James Parrott is the deputy director and chief economist of the Fiscal Policy Institute.

Tax burdens
by income group

Bottom 20%: 12.5%
Second 20%: 11.3%
Middle 20%: 11.6%
Fourth 20%: 11.1%
Next 15%: 10.2%
Next 4%: 8.4%
Top 1%: 6.5%

Source: Institute on Taxation & Economic Policy.

Tax burdens, by income group

Less affluent New Yorkers pay a notably higher portion of their income in taxes than the top earners do, thanks to the state’s regressive tax structure.
http://timesunion.com/AspStories/story.asp?storyID=763966&category=OPINION

Press Rleases by BALCONY Members Since 1-19-09

CSEA
General Contractors Association Press Conference
GCA Member Saves the Day
Construction Industry Conference
New York State AFL-CIO
New York State United Teachers
NYSUT’s recommendations for cost savings, revenues
Fiscal Policy Institute: Lighten weight of tax burden

Read the Releases by clicking this link.

BALCONY Bulletin: January 22, 2009

Read the latest Bulletin from BALCONY: Bulletin – January 22, 2009

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In Albany, Higher Taxes for the Rich Expected

by Danny Hakim

ALBANY — Warning to rich New Yorkers: The tax man might be digging deeper into your pockets in the years ahead.

There is a growing sense in the capital that legislators are likely to turn to an income tax increase on the wealthiest New Yorkers to help close the state’s $15 billion deficit, now that Democrats control the Senate, the Assembly and the governor’s office.

The Assembly, where Democrats have an overwhelming majority, has long supported increasing taxes on the wealthy, and Sheldon Silver, the Assembly speaker, reiterated this month that there continued to be strong backing for the measure among his colleagues.

Gov. David A. Paterson, a Democrat, did not propose any income tax increases in his budget proposal, but acknowledged in last month that “taxing the wealthy is probably going to be part of the solution if the deficit gets any worse, and all indications are that it probably will.”

That could leave the matter in the hands of the Senate, where Democrats won a narrow majority in November. Senator Eric T. Schneiderman, a Manhattan Democrat, said that he planned to introduce a bill in the coming weeks that would increase taxes on the rich, and that he expected his colleagues to have an active debate about the issue.

“There are a lot of us who feel that for the last 30 years we’ve been shifting the tax burden from the wealthy to middle-class families,” Mr. Schneiderman said on Tuesday. “Our conference is operating through consultation and discussion, and I expect we’ll be talking about restoring some additional tax brackets for upper-income New Yorkers as well as a lot of other options.”

Malcolm A. Smith, the new Senate majority leader, said he was not enthusiastic about the idea but looked forward to a vigorous debate in his caucus.

“I know that recent surveys have come back and shown that it is very popular among the people of the city and state, but I’m not sure at this present time it’s the right course of action,” he said, referring to polls showing support for increased taxes on the wealthy. “The conference members are split on the issue and are discussing it, but it’s my belief that it’s the last course of action we should take.”

“I’m not ruling it out, but it’s not the first course of action,” he added.

There is considerable pressure on lawmakers to act, and several powerful interest groups in Albany are pushing for a tax increase for the wealthy as a way to forestall steep budget cuts. Days after the governor unveiled his budget proposal last month, a commercial touting “fair share tax reform” was aired by 1199 S.E.I.U. United Healthcare Workers East, the influential hospital workers’ union, and the Greater New York Hospital Association.

The Working Families Party, a labor-backed party that has considerable clout in Albany, has also been outspoken in its support for the tax.

“We are going to be running a full-throated campaign to make the case that it would be wiser to tax the very wealthiest New Yorkers rather than cut spending on the elderly, children and the disabled,” said Dan Cantor, executive director of the Working Families Party.

“That will mean knocking on doors, organizing local opinion makers, meeting with people affected by the cuts, doing town hall meetings and meeting with legislators.”

Democrats would have to largely unite behind the proposal, because there are probably not many Republicans who would support a budget with income tax increases. Pending the outcome of a contested Queens race, Democrats are expected to have a 32-30 majority in the Senate.

“We are not going to support increases in income taxes,” said John McArdle, a spokesman for the Senate minority leader, Dean G. Skelos, a Long Island Republican.

“We aren’t going to support increases in business taxes, we aren’t going to support raising taxes on people’s insurance policies, their soda, their cable television, their satellite television, you name it,” he added, referring to some of the 137 individual new or increased taxes the governor proposed in his budget last month.

Several measures that would impose higher taxes have been discussed, so it is not clear which path Democratic lawmakers will pursue. The measure previously talked about in the Assembly called for an increase of nearly one percentage point on anyone who earns $1 million or more annually. But other plans echo President Obama’s campaign call for increased taxes on families earning $250,000 or more.

Mr. Silver said in a recent interview, “The extent of the tax is to be determined, but clearly the public has indicated they support a millionaires’ tax, the Assembly has indicated they support it.”

Over the last 30 years, the trend has been to pare back income tax rates on the rich, federally and in the state. Since the mid-1970s, the state has cut its top tax rate from 15.375 percent to 6.85 percent. The top income tax rate in New Jersey is 8.97 percent, and in Connecticut it is 5 percent, according to data from the Fiscal Policy Institute, a liberal research group.

That said, the richest 1 percent of New Yorkers paid more than 40 percent of the income tax in 2007, up from about 30 percent in 1996, according to state data, though that figure is declining as the financial crisis makes the rich less so.

“This is the worst possible time to do this, because the economy is deeply stressed, our key industry is laying in pieces in the gutter and partially nationalized, and a lot of business people have to reassess their future in the most costly city in the country,” said Edmund J. McMahon, director of the Empire Center for New York State Policy, a conservative group.