It won't be easy to put aside the politics of Gov. Andrew Cuomo's huge and defining tax cut package. It dominated the State of the State, and will dominate the next three months of budget negotiations.
Is it an election year ploy, as editorialists think? Is it linked to his refusal to support New York City Mayor Bill de Blasio's signature tax surcharge on the rich? What does Hillary Clinton think? Will this split the labor movement into pro and anti-Cuomo factions? Where sits the Working Families Party? And most interestingly, does he have the muscle to get it done?
Those are for later. For now let's examine what's at stake for the rest of us.
Who gets the tax cuts? The numbers won't be known until we get the budget. The good news for the average Joe is that it will contain some property tax relief for homeowners, and some for renters in NYC. The good news for the big boys is that the bulk of the tax cuts go to a narrow and well-off slice of the 1 percent. The estate tax cut, a big property tax cut for corporations, reductions in the corporate income tax and the bank tax and utility taxes for corporations will go into the pockets of the wealthiest individuals and corporations around the state.
Is this a good idea? Unclear. There is an argument that when you lower taxes on business and the wealthy, the private sector creates jobs and growth, ultimately raising government revenues. That's called "supply-side economics" or "austerity," and has for many been the unchallenged truth in American economic and political circles since President Ronald Reagan. Its proponents run from the British Conservative Party to Republican House Budget Chairman Paul Ryan and the tea party to Andrew Cuomo.
There's a growing counter argument that austerity punishes the economy and citizens by creating huge income inequality and no growth (see Britain, Greece and America since George W. Bush). The alternative is to combat income inequality with a living wage and decent levels of public employment and increased taxes on the 1 percent, as existed in the boom years of Clinton or Eisenhower. That's called "demand-side" economics, and it has a new champion in de Blasio.
Who's right? The answer to that depends on whether you are using evidence or ideology. For the ideologues it's easy. The Right (Republicans generally, the tea party, Unshackle Upstate) are the remaining true believers. The Left (Democratic voters, the Working Families Party and unions) believes that the rich pocket the money and income inequality flourishes.
For those who are interested in evidence, it's going to take some work. The austerity bugs have the advantage of an intuitively acceptable argument: Less taxes, more money to invest. The progressives have a bunch of evidence: New York's economy is weakest where taxes and investment are low, like Buffalo or Utica; New York's economy is strongest where taxes and investment are high, like Westchester or New York City. And the evidence nationally and internationally tilts toward the conclusion that austerity does not stimulate growth.
What to do? Thank goodness for the Legislature. If the Senate and Assembly do their jobs, they will immediately ask the governor for evidence that his tax cuts will stimulate growth. How, for example, will cutting the estate tax create jobs? What's the evidence? He won't want to do it. Watch Assembly Speaker Sheldon Silver and especially Senate Independent Democratic Conference leader Jeff Klein. They're likely to stick with de Blasio on his tax surcharge. But the state tax cuts are in their hands.
All we want is a little evidence. C'mon fellas, this is too important to leave to inside pressures and arm-twisting. Let's talk.
Richard Brodsky is a fellow at the Demos think tank in New York City and at the Wagner School at New York University.