How Not to Balance a Budget

[secret-steve-crumbles]

Anyone who thinks the path to "fiscal discipline" is through higher taxes ought to look at the current budget spectacles in New York and California. The two liberal states have among the highest tax burdens in the country, yet both now find themselves with huge budget deficits and are debating still higher taxes to close the gap.

California has the highest state income tax rate in the country (10.3%), while New York State also has a high income tax rate (6.85%), with the combined state and city rate rising to 10.5% in New York City. Their overall government spending totals also happen to top the national charts. And, what do you know, California is $15 billion in the red this year while New York is trying to close a $6.4 billion 2009 budget hole, which budget expert E.J. McMahon of the Manhattan Institute expects to grow to $26 billion over three years.

California hasn't even passed a budget yet, many weeks into the fiscal year. The Democrats in Sacramento have proposed a series of new taxes on businesses and individuals with incomes above $1 million. Their plan would raise the top income tax rate to 12%, which would be the highest in the nation. They would also repeal a tax law allowing businesses to carry forward losses against future profits.

Full Article (http://online.wsj.com/article/SB122126219384430423.html?mod=rss_opinion_main).

[secret-steve-crumbles]

WWOD? I dunno, raise taxes even more!

[bigshotprof]

I don't know much about Cali, but in New York, the deficit is looming almost entirely because of the financial market meltdown. The financial district, in NYC, accounts for huge amounts of tax income--even counting the extortion payments they receive every year when they threaten to move to Jersey. New York had been operating at close to a balanced budget until this year. Yes the state is taxed highly (although, no upstate does NOT pay for NYC as you might hear. the city gets back about 55 cents for every dollar it spends).

What we can be pretty sure of is that the infamous Laffer Curve--the "theory" that supports supply side tax cuts--is aptly named. Note for the record that there is no coherent theory supporting the Laffer Curve. It was LITERALLY written on a napkin in a restaurant.

[ariastar]

Laffer denies (http://en.wikipedia.org/wiki/Laffer_curve) that.

[bigshotprof]

Laffer denies (http://en.wikipedia.org/wiki/Laffer_curve) that.

I don't know for sure. The anecdote is reported by both Kevin Phillips and Gary Wills. That is why I think it's true.

[mikec]

I know a couple that has owns a small piece of commercial property just outside of Buffalo, NY, The property has a hair boutique, operated by them, and two or three other small shops and a few apartments. They pay $12,000/yr in property taxes. BTW, sales tax in that county is 8.25%.

Taxes too high in NY State??? NEVER.

No wonder there are tons of unsold homes in that area, well before the current housing downturn, and vacant business properties.

[masherscf]

I know a couple that has owns a small piece of commercial property just outside of Buffalo, NY, The property has a hair boutique, operated by them, and two or three other small shops and a few apartments. They pay $12,000/yr in property taxes. BTW, sales tax in that county is 8.25%.

Taxes too high in NY State??? NEVER.

No wonder there are tons of unsold homes in that area, well before the current housing downturn, and vacant business properties.

Visit Duchess, Rockland or Westchester, The housing market is still like it was four-years ago. Poor property values in Buffalo have more to do with the lousy economy than taxes. Most of the taxes in this state are paid by people downstate and property values are still through the roof. What should really be scary is that Wall Street is having difficulties and the amount of tax reveue it generates with be significantly lower this year. That means an even higher state deficit than was orginally projected.

[mikec]

masherscf, I have friends who work for the SUNY system, and the state is so messed up that they are buying forms and other documents from printers out of state because no in state printer can win the competitive bid contracts. Why, because a business in NC or TX doesn't have the tax burden that NY based companies do.

An associate left the Buffalo area and is now in Nashville. The property taxes on his much larger home and property are about 1/4 what Erie County charged.

Is it better management? Is it fewer services? I do know that professional staff at the SUNY system had some amazing benefits until recently. Those cost the State a pretty penny.






(SUNY is the State University of NY system)

[bigshotprof]

I do know that professional staff at the SUNY system had some amazing benefits until recently. Those cost the State a pretty penny.



(SUNY is the State University of NY system)

Their benefits are good but not great compared with some other state systems, I guess mostly because they were union negotiated. The gross pay in the SUNY system pretty sub par though by most standards.

[masherscf]

(SUNY is the State University of NY system)

Um, hello, I went to SUNY Albany for six years.

[mikec]

Um, hello, I went to SUNY Albany for six years.


Dude, that was for the folks who live elsewhere. Somehow In cutting and pasting my text, I deleted a snippet.