New York Democrats Eye Tax Increase to Address COVID-Related Revenue Shortfalls

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New York State Capitol in Albany (Pixabay)

When it rains it pours. . . .

New York — and particularly New York City — has been left in terrible shape by the effects of the pandemic and, lest we forget, the ham-fisted governmental response to it.

But now, well, this.

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Writing in City Journal, E. J. McMahon explains:

As if a second wave of Covid-19 infections weren’t enough, New York’s prospects for economic recovery will face new headwinds — from Albany.

When most of the state’s record 1.9 million mail-in ballots were finally counted this week, it became clear that the New York State Senate’s existing 40-member Democratic majority would grow by at least two seats — giving them their first-ever two-thirds supermajority of the 63-member chamber, enough to override gubernatorial vetoes.

The landmark comes two years after Democrats took control of the legislature’s upper house for only the third time since World War II. Combined with their long-standing supermajority in the 150-member assembly, legislative Democrats now are positioned to have the final word on New York State’s response to enormous state and local budget gaps created by the instant pandemic recession last spring.

As of November, Albany faced a budget shortfall of about $8 billion for the current fiscal year and $16.7 billion for 2022, which begins April 1. Allowing for Governor Cuomo’s habitual inflation of budget numbers, reduce those projected deficits by one-third and the outlook for Albany remains as difficult and challenging as it’s ever been. Federal aid, if and when it flows, will be only a temporary stopgap.

Over the past 25 years, the state government has become increasingly dependent on revenues generated in Manhattan offices and trading floors that remain largely vacant. Government spending, now running far ahead of even the most optimistic revenue projections, must adjust to new economic realities.

But economic reality doesn’t factor into the rising Albany worldview. On average, the state’s incoming class of legislators are more inclined to tax, spend, and regulate — and far from hesitating to impose more restrictions on a shaky economy, they see the pandemic-driven crisis as an opportunity to be exploited.

Months before the election, responding to Cuomo’s early warnings of major budget reductions, most incumbent Democrats in both houses had signed onto a union-backed call to “minimize devastating budget cuts” by “rais[ing] taxes on high wealth” — notwithstanding the already-disproportionate share of state and city taxes generated by the highest-earning 1 percent. Senate and Assembly rank-and-filers have introduced more than a dozen tax-hike proposals aimed at both individuals and corporations, starting with three bills raising the state’s 8.82 percent marginal tax on millionaire earners to as high as 10.32 percent (more than 14 percent in New York City) for “ultra-millionaires.” A one-house version of this measure has been passed repeatedly by Assembly Democrats in recent years.

These are not the kind of prescriptions that a state desperate for investment and anxious (I would imagine) to retain a very significant part of its tax base should be adopting.

It was Lenin who (supposedly) argued that “the worse the better,” meaning that the worse things got, the better it would be for revolutionaries plotting to overturn the old order. There will be perhaps some optimists who will maintain that overreach by “progressives” will lead to a reaction. California’s experience would suggest that that will not be the case. The days of Proposition 13 are long since gone. There will be no counterrevolution.

And there are procedural reasons for thinking that the progressives will be able to entrench themselves in a nearly unassailable position.


Immediate fiscal challenges aside, there’s no understating the longer-term significance of New York’s new legislative supermajorities. For the first time in the federal Voting Rights Act era, Democrats will completely control the decennial redrawing of New York’s congressional and legislative district lines—which inevitably will move New York State further along the path to a New York City-style political monoculture.

When a blue wave flipped New York’s Senate two years ago, Senator Brad Hoylman of Manhattan made a prediction that increasingly looks clairvoyant.

“We’re going to be testing the limits of progressive possibilities,” he said. “I hope we look a lot more like California.”

Insert GIF made from the last scene of the (original) Planet of the Apes here.

Alternatively check out what happened in Arkansas in 1933.

Then read the whole thing, stiff drink in hand.


Read the Original Article Here

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