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Sunday, February 22, 2009

Soak the Few?

This all goes to New York City Mayor Michael Bloomberg, who is in this Wall Street Journal piece.
One percent of the households that file in this city pay something like 50% of the taxes," explained the Mayor.  "In the city, that's something like 40,000 people.  If a handful left, any raise would make it revenue neutral.  The question is what's fair.  If 1% are paying 50% of the taxes, you want to make it even more?"
The New York Daily News quote of the same radio program the Mayor was on is here:
“The first rule of taxation should be you don’t try to tax people who can move.  And…one percent of the…households that file in this city, pay something like 50% of the taxes.  I mean in the city that’s about 40,000 people, so, you know, a handful left, any raise would make it revenue neutral.”
As Lynne from Left in Lowell said in a post on the proposed gas tax, during WWII the top tax bracket was paying 90%.  (That said, I would like to see the actual returns.)  But, the big thing about WWII was that the Roosevelt Administration was trying to sop up money to avoid inflation and was also trying to keep the deficit from ballooning.

The question to be asked in this case is if a small location can raise taxes without creating economic migration.  How many people live close enough to New Hampshire or Rhode Island that they will go across the border to purchase their gasoline?  And, while they are purchasing their gasoline, since Service Stations are no more, but convenience stores are all the rage, what else will they buy while getting gas?

And, with regard to the gasoline tax increase, it is not only recessive, but to the degree it causes us to take actions to reduce our "carbon footprint," it is a dwindling revenue source.

The Mayor of New York City has a point about taxes.

Another point that needs to be made and often isn't is that we are a democracy and there needs to be some sharing of the cost as well as the benefits.  I am not in favor of trying to make up shortfalls on the backs of the poor, but I believe it would be good if everyone paid some nominal amount, even those receiving an Earned Income Credit.  I get Social Security from the Federal Government, but I pay some tax on it.  We all need to feel like we are in this together.

Regards  --  Cliff


Craig H said...

It's always dangerous to make these sorts of sweeping statements, because it's absolutely NOT TRUE that this so-mentioned 1% pays half of the overall tax burden outside the narrow confines of the coffers of the City of New York.

This top echelon overall pays very little in Federal income taxes (remember when George Bush Senior's tax returns became public and we saw how little he paid? And is anyone paying attention to the forgiven loans that have allowed GWB Junior to skate on huge amounts of Federal tax liability?) and enjoys an incredibly diverse set of loopholes and dodges to ensure that the majority of the tax burden is borne by the middle and upper middle classes.

Yes, Bloomberg may have a point whereby the NYC income tax does successfully bite these people, and it's important not to create perverse incentives for them to move across the river and take their tax payments with them.

But this sort of elitist BS that somehow the rich are paying their fair share in taxes overall is extremely damaging.

Flat tax everybody and eliminate deductions, loopholes and other dodges, and this problem goes away.

C R Krieger said...

I am all for the flat tax.

There will always be deductions, since half of the reason for taxes is social engineering, but I would like to see the tax code reduced to a thin volume we common folk could read and understand.

I am also all for being aware of unintended consequences.

Regards  --  Cliff