News over the weekend that Mayor Bloomberg has struck a deal with legislative leaders at Albany to raise marginal tax rates on the city’s wealthiest residents by 16% should shock no one — except maybe those who have taken the mayor at his word for the last couple of months. The mayor has certainly been consistent on the point that he intends to raise taxes, but he’s claimed that the increase would hit commuters, not city residents. Residents, in fact, were supposed to be in line for a break on their income taxes under Mr. Bloomberg’s “tax reform” program.

Predictably, no reform happened. The legislators at Albany were in no mood to increase taxes on people outside of New York City to protect the city’s spending ambitions. Instead, they’re now ready to give the mayor the green light to raise taxes on his own citizens if he so chooses. And, again predictably, the mayor seems ready to make that choice. Almost pathologically averse to cutting the size of city government, the mayor has decided that it’s better to soak the rich instead of finding waste and corruption in the city government — things he has suggested, against all evidence, don’t exist.

So, the solons at City Hall and Albany have determined to raise taxes on the rich. Apparently, they believe that this strategy can be extended indefinitely. New York, however, is already dangerously mortgaged to the rich. As an analysis of 1999 state income tax returns shows, the top 11,570 tax payers who have a tax liability of more than $100,000 — about 0.2% of taxpayers — pay about 20% of New York State’s taxes. Furthermore, a disproportionate number of these ultra-wealthy New Yorkers live in New York City, according to the Manhattan Institute’s fiscal policy expert, E.J. McMahon. This means that the state and city budgets are being balanced on the backs of Gotham’s most productive citizens.

Piling on to this group is not conducive to a strong business climate, a concept Mr. Bloomberg had said he understands. There are other places to live and to do business. As the chart printed at Page One of today’s New York Sun shows quite clearly, New York City’s income tax rate — if the Legislature and Mr. Bloomberg get their way — will be more than three times the top rate in Pennsylvania, will be double the top income tax rates in Connecticut and Massachusetts, and will only miss doubling New Jersey’s income tax rate by a hair. A 16% boost in your non-federal income tax rate bill is bad enough, and this comes on top of an 18.5% increase in the property tax. Greenwich, Connecticut, is already emerging as a plush tax haven for ex-New Yorkers.

The proposed sales tax rate is equally sobering. New York City would see its rate soar to 8.625%, as opposed to 5% in Massachusetts, 6% in Connecticut, New Jersey, and Vermont, and 7% in Pennsylvania. How many New York shoppers will this send across the border into New Jersey? And how many suburban and cross-border shoppers will skip trips into the Big Apple? We’ll only know in retrospect as sales figures in the city remain stagnant or fall off.

A good bit of cynicism has been on display for voters. The mayor has used the commuter tax as a $1 billion placeholder in his proposed budgets for months — and Albany was never expected to cough it up. Therefore, the priority should have been on aggressive cutbacks in spending. City residents are going to be promised a phaseout of these new tax rates, but the record on promises hasn’t been good of late. The estimates of how much cash will be brought into city coffers assume that the tax increase will cause no economic damage. Be certain that there will be damage, and the betrayal of the city is likely to become permanent.