Spitzer’s Tax Cut Meets Opposition from Faso, Suozzi
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After days of ducking specifics on taxes, the Democratic candidate for governor, Eliot Spitzer, is getting behind a plan that he says would provide property tax relief but that fell under immediate attack from his political rivals.
His plan, which he outlined yesterday, essentially takes Governor Pataki’s signature property tax exemption program – School Tax Relief, or STAR – and makes it bigger. Mr. Spitzer’s tax plan is unlike that of his Democratic rival,Thomas Suozzi, and his Republican opponent, John Faso, in that it would not impose a cap on increases in spending by local school districts. Mr. Spitzer would exempt the 2% of highest-income New York City households from any additional tax relief.
Taxes are emerging as the central issue so far in the governor’s race. New York has the highest combined state and local tax burden in the country,and Mr. Spitzer has compared the upstate New York economy, in its desperation, to that of Appalachia.
“Our high property tax burden falls most heavily on middle-class New Yorkers whose property taxes are rising too fast for their incomes to keep up,” Mr. Spitzer said yesterday.
Messrs. Faso and Suozzi say a spending cap on school districts would keep districts from raising taxes and wiping out the state tax relief to homeowners.
Mr. Spitzer’s campaign argues that a cap is anti-democratic, because school budgets are approved by voters in most districts.
Mr.Spitzer spelled out a property tax plan at a point when political pressure had been mounting for him to do so. At every opportunity in front of microphones and voters, Messrs. Faso and Suozzi called attention to Mr. Spitzer’s reluctance to offer specifics, claiming his avoidance was evidence of a secret agenda to raise taxes or simply to do nothing at all.
Mr. Spitzer would double the size of Mr. Pataki’s decade-old School Tax Relief program, increasing annual spending to $5 billion from $2.5 billion.
Under STAR, in areas outside New York City, the state pays a portion of a homeowner’s local school property taxes through an exemption on the first $30,000 of the full value of a home. In the city, STAR essentially underwrites a reduction in the city’s personal income tax.
Mr. Spitzer’s plan is directed at homeowners with incomes below the statewide median income. The campaign says the average middle-class New Yorker would see their property taxes fall by $565.
Under Mr. Spitzer’s plan, the amount of extra benefit falls as income rises; those earning twice the statewide median income or more are completely excluded. No one earning more than $180,000 a year in household income outside New York City would qualify for any additional tax relief under the Spitzer plan.
Mr. Spitzer would also reduce the personal income tax of New York City residents by a fraction of a percent. The highest-income 2% of households would be excluded.
Mr. Spitzer would pay for the enlargement of STAR by cutting about 4% of the state’s budget, which is $112 billion this fiscal year.
His campaign released a chart with brief descriptions of the cuts, which include eliminating corporate loopholes, shrinking the funding for tourism marketing that Mr. Pataki has tapped to put himself on television ads, and better managing chronic diseases that eat up Medicaid dollars. He also proposes to apply the nickel deposit now imposed on carbonated beverages in the state and apply it to noncarbonated bottled and canned beverages such as iced tea, spring water, and orange juice.
Mr. Pataki has credited STAR for relieving some of the property tax burden. Critics, including the state comptroller Alan Hevesi, say they doubt the effectiveness of the program. They describe it a tax shift – as opposed to a tax cut – because it has the effect of moving away some of the burden from tax-paying homeowners and spreading it among all New York taxpayers. In a recent report, Mr. Hevesi went as far as saying the program actually raises taxes by encouraging school districts to spend.
Many Democrats have also criticized the program because the benefit tilts toward New Yorkers who pay higher amounts of property taxes – typically the wealthiest residents. By excluding the wealthiest, Mr. Spitzer’s campaign seems to be addressing those concerns.
Mr. Hevesi, who is running for re election, gave his approval of Mr. Spitzer’s plan and appeared alongside the attorney general in Saratoga Springs at the announcement. Spitzer campaign officials said the comptroller’s office provided informal help during non-work hours.
A spokesman for Mr. Hevesi said Mr. Spitzer addressed the comptroller’s concerns about STAR through the spending cuts.
Mr. Faso, a former Republican minority leader in the Assembly, said Mr. Spitzer chose not to support a spending cap “because the special interests are against it.”
Mr. Faso is proposing to double the size of the STAR exemption. Aside from a spending cap, he is also calling for changes to statutes, such as the Wicks Law, to reduce labor and construction costs.
Mr. Suozzi, a two-term Nassau county executive, says he wants to give counties an additional $2.1 billion that would be directed to the districts with the highest taxes and then would filter down to the property tax payer.