EJ McMahon just can’t help himself. The Manhattan Institute’s “Director of the Empire Center for New York Policy” proves in a series of op-eds that he’s more far-right ideologue than economist and more worried about pushing his agenda than the facts. Last week it was the Daily News, today it was the New York Post, but the message was still the same: taxes and spending=bad, cutting services=good.
So while President Obama is fighting to save our economy through a massive stimulus package, McMahon is intent on pulling New York in the opposite direction, and straight off an economic cliff. And he isn’t going to let any “facts” get in the way.
Let’s take it from the top. Like McMahon said last week, 41% of New York’s income tax revenue comes from the richest 1% of taxpayers. Seems like a lot, until you consider just how rich they are. That same 1% earns more than two and a half times the total income of the bottom 50% of New Yorkers. (1) In fact, New York has the widest income gap between the rich and the middle class of any state in the nation (2).
Turns out, New York’s wealthy pay less of their income in state taxes than the rest of us – the top 1% of New Yorkers pay 6.5% of their income in state taxes, while the middle class pays a whopping 11.6% of theirs. (3) How’s that possible? New York State’s income tax hits its top rate at just $40,000 of family income – which means Donald Trump pays the same tax rate as his doormen and limo drivers. Combine that near-flat tax with regressive sales and property taxes, and being a wealthy New Yorker turns out to be a pretty sweet deal.
McMahon is right about one thing, spending in New York has gone up. But he doesn’t say why. We made a conscious – and millions of New Yorkers would say wise – choice to provide millions of uninsured children with healthcare coverage, invest in our future by instituting universal Pre-K, and finally begin to fully fund underprivileged school districts that have historically been denied their fair share.
Eviscerating the budget as McMahon proposes would undo those efforts, and set New York back a decade.
Finally, McMahon’s favorite myth is that raising taxes on the wealthy would cause them to leave the state, and damage our long-term economic prospects. But he seems to have forgotten what happened the last time the state raised income taxes on the rich in 2003. The economy recovered, the rich got richer and more numerous (there were more high-end taxpayers when New York phased out the tax increase in 2006 than when it began), and we were able to prevent billions in devastating cuts to healthcare, education, and hundreds of crucial public investments. (4)
In fact, hundreds of economists led by Nobel Prize winner Joseph Stiglitz warned in a letter to the Governor this fall that reducing critical spending would only deepen New York’s recession. What’s more, as the New York Times columnist Paul Krugman points out, slashing our way out of the fiscal crisis would have the effect of weakening the economic stimulus President Obama and Congress are poised to put in motion.
There is a way out of the fiscal crisis. But it will mean asking everyone to pay their fair share, including the wealthy New Yorkers who could most afford to do so.
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1. Institute on Taxation and Economic Policy, “Latest IRS Data Reveal Fundamental Mismatches in the States” http://www.itepnet.org/2006soistatemismatches.pdf
2. Fiscal Policy Institute “Balancing New York State’s 2009-2010 Budget in an Economically Sensible Manner” http://www.fiscalpolicy.org/20092010BriefingBookJanuary14.pdf
3. Instituteon Taxation and Economic Policy ”New York: State and Local Taxes”, http://www.fiscalpolicy.org/NYSState&LocalTaxesForNonElderlyTaxpayers.pdf.
4. Fiscal Policy Institute “Balancing New York State’s 2009-2010 Budget in an Economically Sensible Manner” http://www.fiscalpolicy.org/20092010BriefingBookJanuary14.pdf
