The reported direction of the NYS budget negotiations is wrong. That direction focuses on spending cuts and tax shifts. It will worsen the NYS Economy and deprive our kids of the education they need and deserve. The most devastating cuts are primarily in education. Those cuts will deprive our schools of the proper teaching of our children with special needs and of providing of other kids from essential programs. In addition to the catastrophic effect upon a generation of kids – the middle class will bear additional tax burdens.
Why?
There is the Great Recession. It was brought on by a Wall Street that is even now making more money than before. Regardless of the reason for the Great Recession, it has ruined the economy and reduced revenue to NYS and its localities. Below is a chart from Fiscal Policy Institute showing what has happened on Wall Street. Huge bonuses have been and continue to be taken regardless of whether or not there are profits and most recently regardless of whether the profits are from taxpayers bail out money.
The result has been to cripple the economy and because of declining tax revenues the NYS budget is a particular challenge. The indications from the negotiations in Albany are that the crisis is being “fixed” by taking away education from our children and taxing the middle class. Real Estate School taxes are going up in all districts. As the included chart shows, the middle class already pay a bigger portion of state and local taxes than do the high earners.
The amount of money estimated to hold the schools harmless is less than 3 billion dollars. That is but a small portion of the 2009 Wall Street profits or bonuses. A 15 % tax upon the 20.2 billion dollars given in bonuses, if dedicated to elementary and high schools would prevent raising real estate taxes or cutting programs and firing teachers. It seems only fair that Wall Street help the economy, which was wrecked by its wild gambling, but saved by our tax dollars in the biggest bank bailout in history. It not suggested that a 15% percent increase be imposed but the idea gives an example of the availability of money from sources which are better able to pay the additional taxes.
Current pervasive budget thinking gives no thought to the middle class. Current thought is to cut spending upon programs upon which the middle class depends and raising the middle class real estate taxes. Where does this thinking come from?
The simple answer is IGNORANCE. The more complicated answer is a decade of propaganda and myths that have been propagated by special interests. These myths must be dispelled and the truth must become common knowledge.
How?
Each of us must become familiar with governmental budgets and knowledgeable enough to put the lie to myths and misinformation. We cannot rely upon the media as it is as much responsible for the myths and misinformation as the special interest and those who do their bidding.
What must be done? The first step is education – our own.
There are many sources but I recommend the Web Site of Fiscal Policy Institute. This is an organization which gathers data on taxes and budgets. It furnishes analysis and projections. The Manhattan Institute does basically the same thing. Both have a “view” but we must be critical readers so we can use the data. Locally we have James Sheldon’s “Little Town View” which also collects useful data and analysis on the local setting.
Fiscal Policy Institute: http://www.fiscalpolicy.org/
Manhattan Institute: http://www.empirecenter.org/
Little Town View: http://www.littletownviews.com/
The following are a few ideas that we must use to persuade others to protect our schools and the middle class.
Myth # 1
Taxes cannot be raised as we are already taxed too much.
Truth
Taxes are too high on the Middle Class and the Home Owner because of the dependence upon real estate and sales taxes. High end earners are not taxed as much.
Taxes are going to be raised on the property owner and the Middle Class by the current NYS Budget. The Albany budget creates massive tax shifts to those least able to afford the increases. Almost all the recent headlines are about the increase of School taxes made necessary by the
NYS’ “spending cuts”. This means higher school taxes. In addition the middle class is paying more than its share of the tax burden.
The issue is not whether there will be tax increases – there will be. The question is who is to pay? Under the current budget considerations the middle class and the real estate tax payer will bear the brunt of the increases. Who is better able to pay the increase? Should it be the middle class taxpayer? Should it be the home owner?
Consider the following information from FPI. http://www.fiscalpolicy.org/
If you earn $ 33,000 – $56,000 your state and local tax rate is 11.6% If you earn $ 633,000.00 + your state and local tax rate is 7.2%
The following is the chart is the source of the information and is from FPI.
MYTH #2
A tax on high earners they will cause them to leave NYS.
TRUTH
In 2002, a 3 year temporary income tax increase was imposed upon high earners. The following years the number of high earners increased by over 100,000. This happened in spite of dire warnings by Governor Pataki when the legislature was able to override Governor Pataki and increased school funding with budget with a temporary “millionaires tax”.
What is the solution? The following are suggested by the Fiscal Policy Institute:
- Enact temporary tax measures that recapture some of Wall Street’s profit windfall to spur Main Street’s recovery.
- Close loopholes and reform New York’s tax system to make it fairer and more effective.
- Support federal action needed for more fiscal relief, job creation, and ensure corporate taxation. ( note: The House of Representatives has passed such a bill but it has been blocked in the Senate for several months)
New York Has the Ways and Means: How and Why Wall Street Should Give Back to Main Street;
http://www.fiscalpolicy.org/CWF_FPI_NewYorkHasTheWaysAndMeans.pdf
What can we do?
We must educate ourselves so we will not be mislead by those interested in the status quo. Then we need to write, e-mail, blog, write to elected officials, write letters to the editors, picket, march and boycott. The status of the middle class is at stake, if not for us – for our children. We must begin now. Who is “we”? Each person effected and our organizations like unions, School Board members and leaders; as well as music and physical education boosters.
If you are interested in joining me and some others to promote a better budget, better schools, and fairer taxes, please let me know at:
mcgivneydoug@berk.com
Doug McGivney
