Taxes or punishments?

When state and local governments in New York were facing COVID-caused budget deficits of billions, talk of tax increases was in the mix. But now that Washington is coming through with President Biden’s $1.9 trillion aid package, including more than $23 billion in aid to New York, substantially more relief than the governor’s budget plan assumed, the tax hikes should change to match the need, or fall off the table.

So why is a coalition called “Invest in our NY” pushing the Legislature to enact six different tax hikes?

A feared $15 billion revenue canyon this year in Albany is turning into a surplus, and future deficits are smaller, though still significant. But “tax the rich” remains the rallying cry on the left and among their Assembly and Senate allies. And for what reason, if not to raise revenue?

Raising taxes on the wealthy should be a pragmatic solution, not just a punitive one. Relying even more on volatile personal income taxes is risky. If even a handful of billionaires departed the state, the loss of their income taxes could leave craters in the state’s bottom line. “Invest” activists should recalibrate their tax hike demands to match actual budget gaps, which this year is zero.

A better solution, which also answers critics’ concerns state tax hikes will send the wealthy fleeing to Texas and Florida, would be raising taxes on the rich at the federal level. That’s more plausible than any time in recent memory under Biden and the Democratic-led Congress.

“Invest in our NY” activists do raise some important issues. When federal aid arrives, the state should quickly restore funding it withheld in recent months, including tuition assistance for low-income college kids and balances on nonprofits’ contracts.

The state should use some unrestricted federal cash to help the 1.2 million immigrants who were ineligible for federal unemployment benefits and housing aid. And New York can save money by cutting or eliminating entirely some of the billions spent on economic development programs that haven’t helped grow jobs.