Last time we checked, Wall Street was still situated at New York City. That means that changes in laws that affect Wall Street affect the New York economy as a whole. This seems obvious, but it must have escaped the delegation that represents New York. Otherwise, they’d be lining up behind the White House to back new tax cut proposals that would do more to improve life here than a thousand Back-To-School Sales Tax Holidays. At issue are changes being mooted by the White House following its Waco Business Summit. These include reduced taxation of dividends, cuts in the capital gains tax, more generous treatments for capital losses, and increases in the allowances made for various tax-protected savings plans. However, as our Timothy Starks reported yesterday at page one of The New York Sun, most of New York’s delegation has shied away from these proposals, hewing to the standard Democratic Party line that anything that helps Wall Street benefits Wall Street at the expense of all others.

This is nonsense, as most anything that helps Wall Street will help the economy as a whole, and, as the Democratic Party line used to acknowledge, a rising tide lifts all boats. The tax cut on dividends is the most important proposal on the table. Currently, dividends are taxed as ordinary income, which means well-to-do New Yorkers, the sort who might conceivably create New York jobs, are taxed in the ethereal 40% to 50% range on their dividend income — and New York’s high income tax rates come on top of federal taxes. This amounts to the kind of multiple taxation that wreaks havoc on an economy. Companies pay income tax on their earnings. When that money is distributed via dividends to shareholders they are taxed again. The bite is particularly severe in view of the capital gains tax, which clocks in at more than 20%.

The changes being considered for the way capital gains are treated would also be valuable, essentially because they allow the market to rationalize. Under the current rules, there are disincentives to sell stocks. The first, if an individual’s stock has appreciated, is the capital gains tax. The second, if it has lost value (as it has for all too many of us these days), is that losses are not fully deductible. Raising the limit on deductible losses to $20,000 from $3,000 is on the table — something that would be a huge improvement. While the gloom-and-doom crowd would argue that making it cheaper to sell stocks could provoke a crash, this fundamentally misapprehends the workings of the market. Making it cheaper to sell stocks in effect makes it cheaper to buy stocks. In other words, we would have a system where stock prices are more closely aligned to reality. This would forestall what everyone wants to avoid, an economy based on fictions.

Increasing tax protection for savings by enlarging Individual Retirement Account-style programs would also be a positive move, especially if the White House is planning to push for lifting income caps on these programs. Right now, all of those programs are available to the middle class, but not to job creators, which is not good for the Wall Street engine.

So, where is the New York delegation? AWOL, essentially, or busy plugging mammoth prescription drug benefits for Medicare. Senator Schumer did not return requests for comment and has not expressed support for the idea any time recently. Senator Clinton’s office responded to the idea of a capital gains tax cut by blaming current deficits on Mr. Bush’s previous tax cut. New York’s representation in the House fares no better. Rep. Major Owens claims that Mr. Bush wants to “bail out the stock market at the expense of the American taxpayers.” The only one who seems to get it is the lone Republican of the delegation, Rep. Vito Fossella. The rest of the delegation seem to think that their main job is to claim a greater share of the federal pie for New York, rather than making that pie larger. The first step in that direction would be backing the White House’s pro-growth plan.