Wednesday, April 04, 2007

WFP on the New York State Budget

This year's state budget battle is over. The final budget increases education spending and reduces the health care cuts - both good outcomes.

The flaw in the budget debate – and it's a serious one – was on the revenue side. New York continues to have not just high taxes, but highly unfair taxes.

The wealthier you are in New York State, the less you pay in taxes as a percentage of your income. Look at all the taxes a person pays – income, payroll, sales, property, capital gains – and you find that the middle class and working class pay higher percentages of their overall income in taxes than the wealthy. Here's a chart of the effective tax rate in New York State from the Institute on Taxation and Economic Policy (via the Fiscal Policy Institute) that illustrates this point:

NYS effective tax rate vs income

Sooner or later, we have to face this. New York State government has the good fortune to be rolling in money, and so they increased spending and cut property taxes at the same time. We may not be so lucky in next year's budget.

A responsible government – like a responsible household – must inventory its needs for both the short and long term, and then make decisions. We didn't really do that in Albany this year. The passion for an on-time budget got in the way of a more serious exploration of the state's fiscal situation.

The Working Families Party remains committed to just such an exploration. We live in a rich state, but the distribution of income, security, opportunity, and peace of mind is truly screwed up. It's a topic that deserves the attention of our elected leaders.

Tell Governor Spitzer that you think we need a statewide discussion about progressive taxation.

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