(x-posted at ACT NOW)
So, the tax/infrastructure deal in New York State. Some good, a lot bad - it all depends on how you define the baseline.
In order to judge the tax component of this legislation, let's analyze each baseline scenario. If the baseline is that the "old millionaires' tax," a tax of 7.85 percent on income from $200,000 to $500,000 and 8.97 percent on income over $500,000, was only a 3-year measure that was supposed to expire in 2012, then this legislation is technically an improvement on the tax situation; those with incomes over $2 million will see their taxes increase from what they were scheduled to be in 2012 and pretty much everyone else sees a tax cut.
However, if the baseline is the current situation with the "old" tax in place, than next year even those making between $300,000 and $2,000,000 will see a significant tax cut, and even those with incomes over $2,000,000 will see a small tax cut. Those making under $300,000 will see larger tax cuts. So while the middle-class tax cut component is good and I like the new distinction being made between earners of $300,000 annually and $2 million annually (it would be great for the federal tax code to have this distinction), there is still no reason to cut taxes for those making over $300,000 or $2 million annually, no matter how small those cuts may be. Especially with a $3.5 billion deficit scheduled for next year, before this tax deal was worked out. This legislation restores about $1.5 billion of that deficit, leaving a deficit of about $2 billion. But keeping the "old" tax in place would erase the entire deficit and even generate a surplus.
The infrastructure component of this bill, a plan to front-load $1 billion in capital spending for future years into 2012, also has serious flaws. It essentially takes $250 million of dedicated MTA taxes and puts them into the state's general fund. Cuomo "promises" that the MTA will be fully reimbursed out of the general fund, but the state has time and time again not lived up to such promises and has continually cut its general fund transit subsidies over the years. So this legislation will likely end up causing a severe cut to transit spending in the state.
The bill has another component allowing for public-private partnerships and pension funds for infrastructure to the tune of $1 billion, but there is no promise that any of that would fund any transit projects. Furthermore, $300,000,000 of that would come from the Port Authority, which is presumably money that would have been spent on infrastructure anyway. The other $700 million are front-loaded state funds that would have been spent anyway, they are just going to be spent before 2013. So this infrastructure fund doesn't really increase infrastructure spending and the lack of transit spending is disturbing. Aside from that, having an infrastructure fund that can leverage private investment is a great idea, one that should be implemented on the federal level ASAP. But this bill does little, if anything, to increase infrastructure investment and looks highly likely to severely reduce transit funding.
The bill also has a small, ($25 million) component to offer wage subsidies for hiring inner-city youth. This is a good program, but the funding is likely too small to have a major impact.
In sum, this legislation is an improvement on the possible worst case scenario, but not much more than that.
More by ACT NOW's Rich Boatti at http://www.actnowny.org/...