It's difficult to think clearly about taxes, in New York and all over America. Entrenched political interests don't much care about reasons, but citizens should try to figure out what's good or bad about taxes. We've just been given that opportunity by an unlikely trio.
Former Gov. George Pataki, former State Comptroller H. Carl McCall, and Gov. Andrew Cuomo are proposing massive tax cuts in three areas: Property tax relief, business tax cuts, and estate tax cuts. There are political ironies here. Pataki and McCall inflicted stinging defeats on both Gov. Mario M. Cuomo and Andrew Cuomo — Pataki defeating the father, McCall taking the 2002 Democratic gubernatorial nomination that the son wanted. Both are in political semi-retirement but continue to appear on public issues, as it should be. Andrew Cuomo has perfected a "progractionary" politics that has him way left on social issues like gay marriage, gun control and abortion rights, and way right on economic matters.
The Big 3 now offer a package of tax cuts that will be the signature feature of Cuomo's election year budget. But we desperately need to think seriously about what's good for the state.
Here are three questions to ponder:
• Is it progressive? Taxes should reflect an ability to pay. Progressive taxes are tougher on wealthy people, less so on middle income people, and easiest on poor people. Regressive taxes like sales taxes or property taxes, or fees like congestion pricing (charging higher mass transit rates at rush hour, for example) are paid equally, regardless of income or ability to pay. Property tax relief seems to meet the progressivity test. Business and estate tax cuts do not.
• What we would otherwise do with the money? Any tax proposal must be linked to our needs. There will be the usual disagreements on how much to spend on basic services like education or health care. But there are two emerging truths that New York has avoided: Our physical infrastructure is badly deteriorated. Subways, trains, roads and bridges are in disrepair and getting worse. Local governments are in fiscal trouble and getting worse. These needs are at least as important as tax cuts.
• Will it increase or decrease economic activity? Income tax cuts for those who buy things will increase economic activity. Income tax cuts for the wealthy will not. Property tax cuts leave more spending money in the pockets of average taxpayers. Estate tax cuts have little economic impact. Business tax cuts ... well, it depends. Despite all the shouting from business interests, there is almost no evidence of state tax cuts having a stimulative impact. If the Big 3 want to make a case for their proposal, they better come up with some evidence.
There are different ways to think about this, and different conclusions to draw. That's fine. What's not fine is another political free-for-all, with labor unions and activists on one side and big business on the other, with the requisite million-dollar ad campaigns.
The politics are cutthroat. Consider the pressure on Sen. Jeff Klein's breakaway Democrats to oppose the tax cuts; on Assembly Democrats who don't want election-year conflict with the governor; on progressives like the Working Families Party who are caught between their bedrock principles and their relationship with Cuomo; on the labor movement divided between public sector and private sector unions; and on voters who are likely to get a choice between tax-cutting Cuomo and a Republican who would cut more.
This state needs a debate, a conversation about our future. If we can have that, then George, Carl and Andrew will have done some good no matter what the tax rate. If not, we lurch back into the sterile politics of the last 30 years.
Richard Brodsky is a fellow at the Demos think tank in New York City and at the Wagner School at New York University.
