Mayor Bloomberg will unveil some new tax cuts today in his State of the City address, and, as a general matter, we welcome his decision to return some of the city’s surplus to the taxpayers who earned the money to begin with. As far as the specifics go, early indications are that it is a mixed picture. Of the estimated $1 billion in tax cuts for the coming year, $750 million of it will be in the form of property tax reductions. In a sense, that is appropriate, because Mr. Bloomberg, in a violation of his campaign pledges, raised the property tax during his first term.

It is also good to see that this time around, in contrast to Mr. Bloomberg’s earlier program of $400 tax rebates for homeowners, the property tax reductions will extend to the utility companies and big commercial landlords that pay the most taxes. The principle that the largest tax cuts should go to the largest tax payers is an important one, and it is good to see Mr. Bloomberg heading in that direction. Though New York’s property taxes are low compared to those of neighboring jurisdictions, they are still too high. And the cuts today do not obviate the fact that a greater need for relief is in the area of business and individual income taxes. And in sales and use taxes, where the mayor’s call to eliminate the city sales tax on clothing and shoes over $110 — items below were already tax free — is a good idea.

Mr. Bloomberg’s decision to target the unincorporated business tax for reduction is also a step in the right direction. An April 3, 2006 editorial in this column, “Time for City Tax Cuts,” reported that a City Council member from Brooklyn, David Yassky, was working with the council’s Republican leader, James Oddo, and with a business group, the Partnership for New York City, to reduce or eliminate that levy, a 4% tax that for many of the city’s small businessmen amounts to a double tax. Income is first subject to this “unincorporated business tax,” and then to the city’s personal income tax. It’s bad enough that New York is one of the few cities that taxes income; most tax sales or property. But taxing income twice — first as an “unincorporated business,” then as personal income — imposes a double burden that makes New York City less competitive in comparison with other, lower-tax jurisdictions.

Mr. Yassky had estimated that the unincorporated business tax could be eliminated entirely at a cost to the city of $400 million a year. These cost estimates are notoriously unreliable because they usually rely on static analyses that underestimate the growth effects of the tax cuts. But they make it a disappointment that Mr. Bloomberg has apparently decided to stop short of eliminating the tax entirely, preferring instead to tinker around the edges, increasing deductions and tax credits to save taxpayers an estimated total of $114 million a year.

The thing for Mr. Bloomberg to start thinking about now is the presidential race in 2008. He can boast a history of being fiscally cautious, and $1 billion in tax cuts in a $60 billion city budget isn’t exactly dramatic. Together with the $400 property tax rebate, it is a start in the right direction. What the 2008 race is going to need, however, is not just a terrific manager but a leader who can articulate the underlying principles. While the mayor is exploring an independent run, several Republican candidates are bidding for the supply-side mantle. They include Governor Romney and Mayor Giuliani.

Mr. Bloomberg may be able to make the argument that the heavy supply-side lifting at the federal level has already been done by President Bush, whose tax reductions triggered the boom the nation is now enjoying. He may be able to argue that the job for Mr. Bush’s successor will be one of winning the confidence of the American people — and the Congress — in terms of managing Mr. Bush’s extraordinary gains in the face of the Democrats’ attempts to block any extension of the Bush tax cuts. But he will need to do this in a way that stresses his commitment to the underlying principles of maximizing incentives and linking fiscal policy to the goal of growth.