More Progressive State Tax Begins To Take Shape

6.85%

That is the same rate of income tax that a person who earns $50,000 as one that makes $500,000 or even $50,000,000. The burden of course, is on the middle class taxpayer, who feels that 6.85% much more than the other two. Yet in our quest to fill a $13 billion dollar budget gap, our Governor is asking the middle class to bear the brunt of the cuts he wants to enact. The idea of a millionaire's tax was initially floated by progressive groups and unions, only to morph into a more solid plan to make the tax on a more equitable scale. Last week there was talk of this in the State Senate and finally, it is an actual piece of legislation trying to make its way into law.

From The NY Times:

A group of Senate Democrats plans to introduce a bill on Tuesday that would impose an income tax of 10.3 percent on the highest-earning New Yorkers, a rise of 3.45 percentage points, and increase taxes on all households that earn more than $250,000 a year.

The plan, which supporters estimated could bring in up to $6 billion annually to the depleted state treasury, is one of several options Albany lawmakers are considering as an alternative to the reductions in social services and smaller, more focused tax increases that Gov. David A. Paterson has proposed.[...]

With the Democrats now in control, the bill seems to stand a better chance of passing. But not all 32 Democratic members have signed on, including Malcolm A. Smith, the majority leader, who said on Monday that he was not convinced a tax increase was the right solution for New York’s budget crisis.

“Let’s talk about what the problem is,” Mr. Smith said to reporters as he was leaving a conference of the New York Bankers Association in downtown Albany on Monday afternoon. “The problem is foreclosures. The problem is a $15 billion deficit. The problem is trying to figure out how do we create jobs in this economy. So in that regard, I’m not sure if taxes is the way you do that.”

Malcolm seems to be hanging out with the Governor a little too much lately. That was Paterson's argument last month and it didn't hold weight. First of all, the deficit is at $13.7 billion (according to the Governor), not $15 billion. Second, that is still a big number, and we need different ways of addressing the problem. No one is calling this a panacea but closing half of the gap in a progressive tax is a smart idea. The rest can come in smaller cuts and whatever we get from the economic stimulus that the President will hopefully sign soon. The state budget can be balanced, but our leaders need to show...what's that thing called again? Oh yeah, leadership, leadership to get us through these tough times and practice the "shared sacrifice" that they preach.