Monday, April 04, 2011

The big lies behind Cuomo's budget and some truths

by the Green Party of Onondaga County

The Big Cuts and Concessions in [NY Gov. Andrew] Cuomo's Budget: Cuomo proposes to close a $10 billion deficit in a $133 billion budget with 10% across the board cuts, including school aid, $1.5 billion; Medicaid, $2.85 billion; mass transit, $200 million; SUNY and CUNY operating budgets and tuition assistance; and much more. He also calls for 10,000 layoffs, a pay freeze for state workers, and concessions on public workers' seniority, pension, and collective bargaining rights.

The Big Lies Behind Cuomo's Budget:

"We don't have the money. New York State spends too much."

The Facts: New York State government spending has grown at the same rate as New York's economy.


"Big fat salaries and pensions for state workers are busting the state budget."

The Facts: The average NY state worker earns $40,000 a year. The average NY retired state worker has a pension of $14,000 a year. Wages and benefits for state workers are only 13% of the state budget. NYS has fewer state workers per capita than 44 other states.


"The rich will leave the state if we tax them."

The Facts: The corporate-funded Partnership for New York City study that Cuomo and others cite just made up its data. A peer-reviewed study in National Tax Journal shows the rich don't leave for lower income taxes.

(Source and another source)

The Rich Are Getting Richer Because the Exploitation of the Working People Is Up

Productivity (what workers produce per hour) is up 86% since 1978. But average hourly wages are the same today as in 1974. The rich are taking all the gains. In New York State, the top 1% received 35% of all income in 2007, up from 10% in 1980.


The Rich Pay Lower Tax Rates

The top 1% in New York (average income: $3.1 million) pay 7.2% in state and local taxes.

The bottom 99% pay between 9.6% and 10.8% in state and local taxes.


Extending the "Millionaire's Tax" Is Not Enough ($1.1 billion): If the "millionaire's tax" is extended, it will provide an additional $5 billion a year, but only $1.1 billion additional in the coming fiscal year because the millionaire's tax will be in effect for 9 months of this fiscal year even if it is not extended. That is not enough to cover the projected $10 billion deficit. The cuts to schools and other public services will go forward this year even if the millionaire's tax is extended.

Stock Transfer Tax ($15 billion): New York State collected between $13 and $16 billion in recent years from the Stock Transfer Tax, but gave it all back to the traders and then declared a fiscal crisis! The Stock Transfer Tax is a tiny sales tax on stock purchases, with a graduated scale topping out at 1/20th of 1 percent or $350, whichever is less, on large purchases of a stock. Compare that to the 8% sales tax on consumer goods. The tax was adopted in 1905. But since 1981, it has been collected and then immediately rebated. Keeping Stock Transfer Tax revenues would more than cover the budget deficit of $10 billion.


Bankers' Bonus Tax ($10 billion): A few thousand Wall Street bankers and traders have given themselves $20 billion in bonuses in 2009 and 2010 after the taxpayers bailed them out from the federal level with trillions of dollars in capital injections, asset guarantees, Federal Reserve swaps of toxic assets for treasury bonds, and low-to-no interest Federal Reserve loans. A 50% tax on these bonuses would generate $10 billion a year.

Progressive Income Tax ($8 billion): If New York went back to the progressive income tax structure we had in 1972, the state would raise $8 billion more in revenue while giving 95% of New Yorkers a tax cut. In 1972, New York State had a personal income tax with 14 graduated brackets, ranging from a low of 2% to a high of 15%. Today New York has only five flatter brackets, between 4% and 6.85%. Individuals hit the top bracket at $20,000, couples at $40,000. The temporary 2009-2011 “millionaire's tax” is 7.85% on income over $200,000 ($300,000 couples) and 8.97% on income over $500,000.


Property Tax Relief through Single-Payer Health Care: New York State has the highest property tax rates in the country due to unfunded state mandates. The biggest mandate by far is county Medicaid expenses that account for 45% of counties' property tax levies. Instead of Cuomo's proposal for capping the property tax at 2% growth per year, which will devastate schools and other public services, we can relieve counties of their Medicaid costs by a state takeover of all Medicaid costs, allowing counties to cut property taxes and still fully fund schools and public services. The best way to take over Medicaid costs is through a single-payer health care plan for all New Yorkers, which a recent state funded study concluded would reduce health care costs in New York by $28 billion a year by 2019 compared to the private insurance mandate recently enacted by the federal government.


A Fair School Aid Formula: New York State has the 46th most unequal state school aid formula in the US. Rich districts spend more than twice as much per student as poor districts. Rich districts depend on state aid for only a few percent of their school budgets, while poor districts depend on state aid for upwards of 65 percent for their budgets. We need a straightforward, needs-based aid formula so that all students have their right to a “sound basic education” under the New York State Constitution, as affirmed by the courts in the Campaign for Fiscal Equity v State of New York decisions (2001-2006).

A Green New Deal for Full Employment: Private jobs are good, but public jobs are necessary for full employment. Spend the fiscal surplus from progressive taxation on public jobs in public works (clean energy, mass transportation, green buildings, water and sewage works modernization, environmental clean-up, etc.) and public services (schools, health care, job training, child care, elder care, youth programs, parks, libraries, etc). The increased demand from full employment will stimulate economic recovery and more jobs in the private sector. A public jobs program to create 500,000 jobs paying living wages of $14-$17 an hour would cost about $14 billion, about equal to what the Stock Transfer Tax brings in.


Progressive Tax Reform vs. Cuomo's Austerity Budget

Progressive tax reform ($15 billion Stock Transfer Tax, $10 billion Bankers' Bonus Tax, $8 billion Progressive Income Tax) would generate $33 billion in additional revenues. After closing the $10 billion deficit, we would have $23 billion left for full employment, good schools, clean energy, mass transit, and other public needs.

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