Now that thirty years of deregulation and tax cuts for the wealthy have failed so spectacularly, creating an economic catastrophe in its wake, the American people are beginning to recognize conservative economic policy for what it is: a disastrous recipe for privatizing profits and socializing costs, and shifting the economic burden to the poor and middle class.
But with 46 states facing budget shortfalls it is clear that conservative orthodoxy is still alive and holding sway in too many statehouses. Too often, the emphasis isn’t on change we can believe in — but on the same old cutting of services that people need rather than raising taxes on the rich who have disproportionately benefited from fiscal policy over these many decades.
We certainly see this short-sighted and proven wrong approach being pushed in New York. The state is confronting a budget deficit of $15 billion, and Governor Paterson has proposed $9 billion of harsh cuts in education, healthcare and social services, and $5 billion in new taxes that would hit the struggling poor and middle-class the hardest — making an already regressive tax system even more so.
If you asked most New Yorkers what income level qualifies for the highest tax bracket you would get a range of answers — from $250,000 to $1 million to $5 million. In fact, an individual making just $20,000 pays the highest income tax rate of 6.85 percent. So a teacher — perhaps one of thousands who would be laid off under Paterson’s proposal — currently pays the same rate as Bernie Madoff, Donald Trump and the hedge funders. Equally troubling, Paterson’s proposed revenues would be generated through taxes and fees on items such as sodas, transportation, cable tv, college tuition … things that would hit the already struggling poor and working class the hardest.
Fortunately there is a great alternative proposal gaining momentum in the New York legislature and with constituents. Democratic Senator and Nation contributor Eric Schneiderman has introduced the Fair Share Tax Reform Act of 2009 which would raise $6 billion in new annual revenues by slightly increasing the taxes on the wealthiest 5 percent of New Yorkers.
“Over the last thirty years the combination of policy changes in New York State have resulted in a severely regressive tax system,” Senator Schneiderman told me. “The richest 1 percent of New Yorkers now pay 6.5 percent of their income in state and local taxes. While the middle-class, the poor — everybody else — pays over 11 percent of their income in state and local taxes. The poorest New Yorkers — the bottom quintile — actually pay 12.6 percent….”