The Institute’s report was unavailable at this writing, but as described by the Sun, the premise seems to be that Obama would tax the rich (individuals making $200,000+, households making $250,000+), and New York has a lot of rich people, so New York would lose out. As “Mr. Obama’s tax plan would direct $13 billion in credits and subsidies to New York residents but would raise the taxes of the state’s highest earners by $16 billion,” says the Sun, “a net difference of $3 billion over a two-year period” would ensue.
Also, the paper says that Obama’s planned raising of the top two Federal tax brackets by three and 4.6 percent, respectively, would cause high-earners to “minimize their taxable incomes,” presumably by working off the books or availing tax shelters, thereby “feeding the cycle of both fiscal and economic decline.”
Setting aside the possible misrepresentation of Obama’s plans (his campaign blasted the report as “a press release devoid of facts”), we wonder if the Sun or the Institute would be more receptive to a wealth distribution scheme in which sub-rich New Yorkers got more credits and subsidies than the rich lost in taxes. New York already pays more in taxes than it gets in Federal largesse; the signal difference with the Obama plan, even as described, seems that the pain would be spread a little more evenly. And as Sun on Monday praised the fall of Lehman Brothers as an opportunity to “treasure… a system that enables people to dare, to take great risks,” we know that they are not always so averse to a little shake-up at the top.