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Michael Miller

Viewpoint

By Michael Miller
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Random Thoughts About Taxes

Last week, Governor Cuomo appointed Kenneth Adams, head of the state’s Business Council, to be his economic development chief. Mr. Adams said, over and over, that his priorities are to lower taxes and relax regulations on New York businesses. This will create jobs, say Mr. Adams and Governor Cuomo.

Mr. Adams: “For all those businesses that say, ‘We need lower taxes, less onerous regulations, we need to be freed up so that we can expand,’ I’m their guy.”

“Creating jobs” in any significant way is beyond the will or power of our governments. We’re about 22 million jobs away from anything like full employment in this country. We’re past playing little games with tax rates. We have no national strategy for rebuilding our economy, for creating a meaningful place for millions entering the workforce and those lost outside of it.

This country has several distinct economies. Most Americans live in an economy, which has been contracting beneath their feet. Some people reading this work and live in a whole different economic reality.

New York’s highest corporate rate is lower than the top rates in 22 other states.

In 2010, 63.06 percent of New York’s tax collections came from personal income taxes, paid by individuals and their spouses. When I was a little child, when New York was still building the highways, bridges, colleges, schools, libraries and parks that set it apart, collections from individuals consistently hovered around 43 percent.

It is part of the standard stump speeches of a few hundred Senators and Representatives in Washington that American corporations are burdened with some of the highest tax rates in the industrialized world (the lowest rate is 15 percent and the highest rate, which kicks in at just over $18.3 million, is 35 percent). Here on Planet Earth, the actual taxes paid after credits, deductions and other adjustments aren’t always quite that high.

In the third quarter of 2010, corporate profits were a record $1.659 trillion, which also represents a record year-to-year increase of 28 percent. Revenues from corporate taxes actually declined $2.5 billion in the states that collect corporate income taxes and which now have budget deficits.

Big multistate corporations have lots of legal leeway to determine in which jurisdiction their income will be taxed. Sometimes they actually move operations to another place, but usually it’s done through accounting shifts.

A study by the General Accountability Office, the nonpartisan research arm of Congress, found that 28 percent of foreign-based companies and 25 percent of U.S. corporations with more than $250 million in assets or $50 million in sales paid no federal income taxes in 2005.

Our federal tax code is 100,000 pages for a reason.

I don’t blame corporations for acting this way. This is what they do. Sharks eat and swim. Large corporations maximize benefits for those who own stock and hold stock options.

Our government is supposed to balance the scales. It isn’t.

According to a report issued last week by the Tax Foundation, a think tank associated with Koch Industries and its Americans for Prosperity group, residents of New Jersey, New York and Connecticut paid the highest percentage of their income to state and local taxes in 2009 (New Yorkers paid 12.1 percent). This was widely and dutifully reported everywhere.

Reading the entire report adds a little perspective. Per capita, state and local taxes actually fell in New York in 2009, by about four percent, but income fell by six percent.

Year in and year out for over three decades, New Yorkers have paid about 12.1 percent of their incomes to state and local governments. The highest percentages were 13.2 percent in 1977 and 12.8 percent in 1994; the lowest percentage was 11.5 percent in 2001. Most taxpayers are being squeezed on so many sides, their incomes stagnate or sliding, they are losing the ability to match the contributions of those who came before to build and maintain an Empire State.

Politicians who offer rank-and-file New Yorkers only a choice of indiscriminate austerity or fiscal catastrophe are not leveling with us. There are other options.

Michael Miller is a freelance writer, designer and strategic consultant who has worked in state and local government. Email: millercolumn@optimum.net