Spitzer Tax Shift
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.
When Attorney General Eliot Spitzer of Manhattan chose Senator David Paterson of Manhattan as his running mate in the campaign for governor, the decision set off grumbling that the Democratic ticket might be too tilted toward Manhattan. Anyone who still thinks that may want to take a look at the chart that ran alongside the dispatch by our Jacob Gershman on the front page of Friday’s New York Sun. It showed that the Spitzer tax cuts are tilted heavily toward the suburbs, so much so that in some cases, a Westchester taxpayer with the same income and the same home value as a Manhattan taxpayer would get a tax cut of $1,221 more that the $251 that would go to the Manhattan resident.
If it looks like Messrs. Spitzer and Paterson are bending over backward to prevent any impression of Manhattan favoritism, feature what’s happening on the spending side. The backdrop is that a state judge, Leland DeGrasse, has ordered $23 billion in additional spending on New York City’s public schools. It’s an unconstitutional ruling, in the view of many, and the Republican candidate for governor, John Faso, who is from Kinderhook in the Hudson Valley, has vowed to defy that court order. Mr. Spitzer has straddled the issue. As Governor Pataki’s lawyer, Mr. Spitzer has dutifully fought against the Campaign for Fiscal Equity in court. But one of Mr. Spitzer’s campaign consultants, Luis Miranda of the Mirram Group, is chairman of the Campaign for Fiscal Equity.
So the betting is that if he is elected governor, Mr. Spitzer will do a pirouette and deliver some of the CFE money to New York City. So the net result would be higher taxes for New York City and more government spending on New York City. It’s a sharp contrast with the approach of Mr. Faso. Mr. Faso also has a Spitzer-style property tax relief tilted toward the suburbs. But unlike Mr. Spitzer, Mr. Faso has more tax cuts that would benefit New York City residents – including an elimination of the estate tax and a reduction of the tax rate on income between $40,000 and $80,000.
Mr. Spitzer has said his tax cuts are aimed partly at curing the drain of population to other states from New York. But he doesn’t seem to get it, any more than does the New York Times, which last week ran a 1,500 word article on the population drain, an article that, as vodkapundit.com noted, managed to avoid mentioning New York’s highest-in-the-nation state and local tax burden. And as the Manhattan Institute’s E.J. McMahon notes today in a letter to the editor of the Sun, Mr. Spitzer’s tax plan is less a tax cut than a tax shift. Since many of those leaving the state are younger workers, and since New York City is more of a magnet for young people than the suburbs are, the Spitzer tax shift providing tax relief targeted to senior citizens and the suburbs seems particularly ill-fitted to New York state’s challenges.
Mr. Spitzer may figure he is so popular – and he’s a wonderful fellow to talk with – and so far ahead in the polls that he doesn’t have to worry about the details of tax policy, because few voters will. It’s the same assume-the-average-voter-or-consumer-is-easily-duped worldview that informed Mr. Spitzer’s crusades as attorney general against music promotion on the radio and against Wall Street stock “research.” Our own view is that New Yorkers, who are anything but dumb, will figure it out.