NEW YORK, NY — With Mayor Bill de Blasio’s first budget just kicking in this month, New Yorkers should be grateful that Albany managed to block the Mayor’s proposed increase in city income taxes. But we ought not relax just yet, if ever. In his budget presentation, the Mayor announced his intention to again lobby for income tax hikes before long; and his allies in the Working Families Party have promised to keep working for higher taxes.
With big spending, high taxing “progressives” occupying all citywide offices, those who favor more frugal government might wonder if tax relief is even remotely possible.
History proves that sweeping changes often begin with an unknown or unpopular idea being championed by seemingly quixotic advocates. Socialists Eugene Debs and then Norman Thomas ran hopeless campaigns for president a century ago, but planted the intellectual seeds that culminated in the creation of the Social Security system years later, encouraged by President Franklin Roosevelt. In 1964, conservative Republican Senator Barry Goldwater was clobbered in his challenge to President Johnson. Goldwater carried only five states, but he inspired a generation of young activists who assisted Ronald Reagan in capturing the Presidency and implementing many of Barry’s conservative ideas only 16 years later.
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So with the Mayor and other powerful voices calling for tax increases on high earners, it is worth asking a cosmic question: Why does New York City even have an income tax? As more states move toward abolition of income taxes, a locality like a city – our city — that imposes such taxes stands out like a sore thumb, especially when coupled with high New York state taxes. North Carolina has created a lower, flatter tax as an interim step towards abolishing their income tax. Progress was recently made in Louisiana and Nebraska toward ending their income taxation. Seven states already refuse to levy income taxes, and ten governors proposed income tax cuts last year.
New York City is among just a handful of cities and localities that taxes its citizens’ income, all of which was implemented by “progressives.” Overwhelmingly, Americans do not live in cities or towns that impose income taxes. Only Philadelphia, D.C., and Scranton approach NYC’s top marginal rates of over 3.9% of income, over and above our high state income taxes. Of the 18 million Americans who live under regimes that demand city income taxes, nearly half (8.4 million of us) live in New York City. Governor Andrew Cuomo, prior to Mayor DeBlasio’s election, was forthright: “New York has no future as the highest taxed state in the country.”
It’s not as though city income taxes came in with the cotton gin or even the Statue of Liberty. At least two million New Yorkers can recall that friendlier time when the city did not tax incomes. The income tax was signed into law by then-Mayor John Lindsay (another “progressive” icon) in 1966, a year after The Beatles’ first Shea Stadium concert.
With our new Mayor having pressed to “tax for the sake of taxing” (as Governor Cuomo’s top aide, Larry Schwartz, phrased it), what would it take to bring us back to those glorious days of 1965, when New York City was not taxing incomes? New York City’s planned expenditures for fiscal year 2015 are $75 billion, though the Independent Budget Office expects that some initiatives will cost more than planned. City income taxes to be collected will account for $9.5 billion of that, or 12.7% of the total budget.
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