Now that we, like millions of other New Yorkers, have put our checks to the federal and state tax collectors in the mail, or authorized electronic transfers, let us reflect for a moment on the prospects ahead. Real estate is trading at startlingly high prices and a frenetic pace (much of the boom being ignited by the end, in 1996, of the Cuomo Tax, surtax on certain real estate gains). The stock market in recent months has been marking new highs. Our big financial houses have reported some record bonuses. It would not surprise us in the least if, when the tax revenues are counted up, they surpass the estimates that the economists and government planners have been using.

If so, it will be a supply side moment. One recent chart that passed our way was assembled by the Tax Foundation. It shows that between the beginning of President Reagan’s supply-side revolution in 1980 and 2004, the percentage of total federal income tax paid by the top 1% of earners soared to 36.89% in 2004 from 19.05% in 1980. The percentage paid by the top 5% of earners soared to 57.13% in 2004 from 36.84% in 1980. Robert Bartley of the Wall Street Journal used to call it President Reagan’s “soak the rich” plan.

This trend holds in respect of New York State tax revenues as well, according to research by E.J. McMahon of the Empire Center. He reckons that between 1994 and 2007 the share of taxes paid by the top 1% of earners has ballooned to 22% from 12%. “The state’s dependence on its wealthiest residents has been rising,” he has said.

Incidentally, the reverse effect has been taking place at the lower end of the income scale. Nearly all income tax revenues come from the top half of earners. But the share paid by the bottom half of the income scale has plunged at the federal level to 3.30% in 2004 from 7.05% in 1980, according to the figures charted by the Tax Foundation. This is all something to think about as the Democrats in the Congress and in Albany get ready to make another attempt to raise our taxes and as the Republicans try to summon the will to fight for the tax cuts through which President Bush ignited the boom we are enjoying today.

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