A tax hike masquerading as a “jobs program”

by E.J. McMahon |  | NY Torch

rip van winkleA 21st Century Rip Van Winkle, awakening after a two-year catnap, might assume based on this morning’s newspaper headlines that David Paterson had been elected governor in 2010. But after rubbing his eyes and donning his reading glasses, old Rip would discover that the governor now getting ready to execute an 180-degree turn on taxes — just as Paterson did in 2009 — is none other than Attorney General Andrew Cuomo.

I do my best to explain what’s going on in today’s New York Post. The Assembly and Senate both reportedly are preparing to convene by mid week, for purposes of voting on … something or other. The governor Sunday issued what he called a “job creating economic plan” that would include casino gambling (which would require voter approval of a constitutional amendment in 2013), “regional strategies” for economic development (nothing new), an infrastructure financing plan that would tap pension funds (first reported a couple of weeks ago), and government jobs for unemployed teens. No mention of a permitting process for natural gas exploration, which would generate far more jobs and economic activity upstate than all of the other options put together (although the folks in Albany’s Academy Park would not approve).

Oh, yes — and the governor also mentioned something about making the tax system “fair, affordable and one that incentivizes economic growth.”  These words would normally imply an overall tax cut — except, keep in mind, the real purpose of this week’s special session is to raise taxes.

Will the latest version of the “millionaire tax” also start at incomes as low as $200,000?  Will it be permanent or temporary?  How high will the marginal rate be set?  The New York Timessuggests these answers:

..[O]ne or more new tax brackets for high-income earners would have those individuals paying less than they did under the surcharge — allowing officials to say that the millionaires’ tax had lapsed — but paying at a higher rate than they would have been under existing tax brackets. The proposal would also lower the tax rate for middle-income earners and might include tax incentives for businesses. It was not clear on Sunday what the income thresholds would be.

The officials, speaking on the condition of anonymity because the talks were private, said that if agreed upon, the new rates would last for several years; a commission would be created to come up with permanent new rates and to address tax loopholes and changes to business taxes.

Details to follow. Eventually.

As for the economic development program — to which the Times applies that Obama-esque label, “stimulus” — chances are it will look a lot like this, prompting Rip to conclude that he’ll miss nothing by going back to sleep for another three years.

- E.J. McMahon is the President at the Empire Center for Public Policy.