Friday, 16 July 2010 00:00
At this point, who among us really knows what’s in or out of the state budget, which announced agreements are in force or are in the trash, or where we’re supposed to go from here (wherever “here” is). In a kind of self-defense mechanism, citizens are tuning out the noise. Interest in what happens in Albany is fading into a swirling blur. On the day after record vetoes, disturbing threats and unprecedented new lows, both Newsday and the Daily News relegated their little bit of state government news to Page 22. It’s the kind of environment in which calamitously bad decisions thrive best.
It was clear that we’d get holding actions rather than long-term solutions when an agreement was announced allowing local governments to borrow up to $6 billion from the pension funds in order to pay their obligations to the pension funds. Punt.
They may well be able to pull this stuff off on paper in 2010, and maybe even next year. Not after. By 2012, unless the long-term revenue deficiencies are solved, houses of cards will be coming down all over New York.
There’s a bullseye on middle class New Yorkers. When the dust settles, some SUNY university centers may be able to triple tuition. Of course, those earning $10 million or more this year will have a small reduction in how much they can write off in charitable donations. That’s fair and balanced, New York style.
The primary objective of both parties in Albany is to gain control of the State Senate, so that they control the redistricting process in 2012. No boat rocking allowed.
Governor Paterson has doubled down on a flat cap on property tax increases. Typically, his plan will not fix anything and will likely make things much worse. Vulnerable families and businesses will not be relieved of unfairly burdensome taxes. Inequities between communities will be locked into place and flexibility restricted at a time when Nassau County property values and assessments are in the greatest flux ever.
Meanwhile, in the middle of all this, the state’s new “Income and Tax Liability” report came out, covering the taxes many of us paid in April 2008. If you are among the 13,819 year-round Nassau County residents who earned $500,000 or more, you paid an average of 6.4 percent of your state adjusted gross income to the folks in Albany, after deductions and adjustments. If your income was in the $75,000 to $100,000 range, you paid 5.5 percent to the state. If your income was in the $40,000s, you paid 4.7 percent. These are hardly progressive tax rates. Meanwhile, those with higher incomes pay a significantly smaller percentage of what they take in to property taxes.
The average Nassau County taxpayer in the $500,000-plus range reported a mean average of $1.818 million in state adjusted gross income. An emergency surcharge of 2 percent on the income of just these taxpayers (that’s $20,000 for every one million in adjusted gross income) would have generated $502 million. That’s more than enough to plug even the worst nightmarish projected county budget deficit and avoid the layoff of thousands of middle class neighbors working at every level of government. People in these upper income brackets have largely been unaffected by the Depression.
Last month, a Gallup survey found that the self-reported spending of upper-income Americans rose 33 percent in May, experiencing what Gallup’s chief economist called “frugality fatigue.”
We all should pay less in property taxes, a concept that is based on rural economies and definitions of wealth that are nothing like those of the 21st-century. Taxes are the rent we pay to live and thrive in this society, and everyone should pay taxes, to the extent that they can. The schools, the parks, the libraries, those feelings of security that sustain our lifestyle and our property values cannot be preserved unless we come to grips with this fundamental instability.
Our state and local finance systems are unsustainable. There is no federal bailout. No next year. No time. This is the crisis of a lifetime. If our leaders can’t reach back and even discuss change, why do they want to be leaders? Whose interests are being represented? Whose?
Michael Miller is a freelance writer, designer and strategic consultant who has worked in state and local government. Email: email@example.com