First step is to tax the rich
Won’t tax the rich, won’t, won’t, won’t. Well, maybe.
Of course our overly esteemed governor is likely to tax the rich, no matter what he has said in the past, or whether he likes it or not. We already do, a lot.
You don’t need a Willie Sutton moment to know that’s where the money is, or our predicament. Facing a $14.5 billion revenue shortfall for this year’s state budget, a tanking economy in the midst of a deepening recession brought on by COVID-19 and a hostile federal government resistant to helping New York out, even Gov. Andrew Cuomo has observed he has very limited options.
It seems to me, then, the open question isn’t really whether, but how, how much and for how long. There is a sense of pressing immediacy. A 20 percent cut to public education, already underfunded, is simply unacceptable. Want to chase away the well-to-do? Stay on that road. In addition, those cuts most impact the community falling further and further behind in the income equality sweepstakes.
The governor says he won’t talk about taxing the rich because it would compromise his current negotiating position with the feds over a stimulus relief package. What position? But Cuomo is not as foolish as he sounds. He knows the odds of the feds coming through with anything meaningful in the near future are astronomical. I’ll bet that the governor’s budget division is hard at work considering and handicapping the various fundraising schemes we’re hearing from legislators and others, and soon he will present a package of reasonably acceptable tax proposals. No doubt the rich will figure prominently again in saving our bacon, but not alone. Nor should they be.
Nobel laureate economist, Columbia University professor and New Yorker Joseph Stiglitz, along with Kitty Richards of the Roosevelt Institute, writing in The New York Times a few weeks ago implicitly make a common sense argument for spreading extra taxation down to those who have suffered least and even profited during the pandemic. They argue now is not the time to cut valuable government services because that can only prolong the recession, and those cuts fall hardest on those already hurt most by events. They also support pouring more, not less, into schools at this point, to help create proper safe classrooms, with more teachers and support staff, not fewer, so kids and teachers can get back where they belong: in school.
“Tens of millions of workers have lost their jobs since the beginning of the COVID-19 crisis, but almost half of Americans report that their household has
not lost any employment income at all, according to Census Bureau data,” write Stiglitz and Richards. ”That figure jumps to two-thirds for households bringing home more than $200,000 a year.” Which brings us as well to those who have investments, no matter how modest, that have inexplicably thrived or at least not tanked because the stock market just keeps soaring along, oblivious to the suffering on Main Street.
With Wall Street in mind, particularly attractive is our local Assemblyman Phil Steck’s longtime advocacy for a quarterpercent stock transfer tax, a sort of tiny sales tax on stock transactions, that would target a far broader audience than just the rich. It’s a tax already on the books since 1905, and was collected until 1981 when New York decided to rebate it back to the brokers in an act of Reaganesque generosity.
Steck estimates it would bring an average $13 billion a year to state coffers. That’s got to look awfully good to Cuomo.
What the governor is no doubt betting on heavily, and I am with him on this, is that Joe Biden is elected president in a couple of months, and that the U.S. Senate is flipped Democratic. That would all but assure a deserved fiscal bailout for states including New York hard hit by COVID-19. So probably a sunset after a year or two or at least a revisit would dull the pain for any stock market taxes the governor imposes and mitigate the perception of chasing away wealth to a more hospitable state.
Just as daunting ahead of us though is where the money goes and where it shouldn’t once we do raise new revenues from new sources.
We’re in a different world now than when this state budget was concocted, and it’s going to stay different for some time. Who knew we had a day care crisis in this country? Medicaid, education aid, aid to local governments need a new looking at in light of the new reality. Are nursing homes ready for another round of COVID-19? Our hospitals?
And foremost and finally, the unknown needs of New York City once it bottoms out, the fiscal engine that drives our train. Unfathomable black hole comes to mind.
It bears remembering we have no choice. We are one. What has been true for a very long time prevails: as New York City goes, so goes the state. And, not incidentally, it’s where many of those rich folks live.