Pataki's Class Bias

Guv Seeks Sacrifice From Average New Yorkers, Protects High-End Friends

A year and a half after 9-11, with the state and city facing catastrophic deficits, all that matters to the New York Post's governor is protecting the rich from a temporary tax surcharge. That is the state's only current economic policy, as dictated by the only editorial page that matters to a governor auditioning for a Bush future.

Posing in camouflage compassion in last year's re-election campaign, George Pataki can now govern for a kangaroo constituency of one, Rupert Murdoch, whose newspaper rails daily about supposed tax traitor and senate GOP leader Joe Bruno. A Post icon forever, Bruno dared to suggest that he and Assembly Speaker Shelly Silver might just do a $2 billion PIT (personal income tax) hike to reverse Pataki's savage slashing of school and health aid, provoking sudden threats of an Australian coup on American soil.

So, as the legislature reconvened Monday, the governor, having already targeted average New Yorkers with proposed hikes in transit fares and college tuition as well as clothing and tire taxes, suggested that he'd prefer a sales-tax boost for all to a higher PIT for six-figure earners. The Post simultaneously carried op-ed wisdom from Steve Kagann, the governor's chief economist, who, for the first time, abandoned explicit opposition to increases in any broad-based, "job-killing" tax. Invoking "the unemployed who lost their jobs under the weight of 9/11," Kagann assailed PIT increases exclusively, calling them "especially dangerous and damaging" and implicitly opening the door to a wink-and-nod hike in the 4 percent state sales tax (the other 4 percent is local).

As logical as it might be to think that, in a troubled time partially prompted by terrorist attack, wealthy elites would be the ones called on to make temporary and insignificant sacrifices, such suggestions are, in Pataki's and the Post's world, treason. PIT and WMD are interchangeable causes for a declaration of war. If there is a statue of Joe Bruno in his home Rensselaer County, Fox is ready to film its downfall. How Bruno failed to understand that the 9-11 burden belongs to the soon-to-be-laid-off hospital workers and classroom paraprofessionals—or anyone who shops—is beyond the real-world tabloid economists who advise our wily governor.

The Institute on Taxation and Economic Policy found that New Yorkers who earn less than $15,000—our bottom quintile—spend 9.5 percent of their income paying state sales and excise taxes, while those who make over $634,000—our top 1 percent—spend only 1.2 percent of their income on such taxes. The institute's chart is so symmetrical that it clearly shows the state's sales taxes are "inversely related to income" across all levels.The state's PIT, on the other hand, takes nothing from those in the bottom quintile, moving up the ladder to 6 percent for those earning over $634,000, just as symmetrically.

So if, after an economy-flattening air attack, you were the governor and had to choose between these taxes, wouldn't you, too, embrace the obvious advantage for all New Yorkers of protecting the trickle-down wealth of high earners?

Two Manhattan assemblymen, Steve Sanders and Pete Grannis, told the Voice that the governor actually raised the possibility of a sales tax increase in a conversation last week with legislative leaders. Silver told his Democratic conference on Friday that Pataki interjected it. "The governor asked, How about a sales tax?" Grannis recounted. "But when pressed if that's what he was proposing, the governor said, 'No, I'm not proposing any taxes.' " Sanders said much the same thing: "The governor was sending signals late in the week that he was not opposed to an increase in the sales tax."

Grannis and Sanders agreed that there was "no support for a sales tax increase in the conference," but Grannis noted that it "could provide cover for Republicans in the senate." The "only appeal" of the sales tax hike, said Grannis, was that the legislature "could get the budget restorations without having to worry about overriding a veto." Bruno and Silver have suggested in recent days that their two majorities were prepared to override likely Pataki vetoes of budget bills, from the restorations to any PIT hike.

Brooklyn assemblyman Jim Brennan said, "The ball is now in the senate's court," noting that Bruno will "either stick with the assembly on the tentative agreement we had to do the income tax surcharge" or go with Pataki on a sales hike. "Bruno has the same problem with a sales hike that we do," said Brennan, namely that "the voters will be reminded every time they make a purchase" that the legislature added this to their bill. But if Bruno switches, Brennan said, "the assembly will have to come back to discuss it." Faced with a choice between a sales increase or no restorations, assembly Democrats will almost undoubtedly adopt a hike they overwhelmingly oppose.

As the Voice closed on Monday, it was still unclear where this latest trial balloon will land. But it is clear that Pataki will veto a two- or three-year PIT increase on incomes over $100,000 or $200,000—two of the proposals floating around Albany—even as he ends pre-K and after-school funding as well as narrowing the eligibility for one of his much ballyhooed health insurance programs.

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