Just Another Politician

In 2010, I voted for Carl Paladino, the Republican candidate, in the New York gubernatorial election.  He was the Tea Party candidate, and a bit of a nut, but I couldn’t to bring myself to vote for Andrew Cuomo, the Democratic candidate, because he was just another politician.  (That, and his father had been governor before him.)

I doubted that Paladino would actually win, and I was right.

But I was pleasantly surprised with the first few months of Governor Cuomo.  He stood up to the rest of the government and was able to balance the budget with no new taxes.  Even though I didn’t vote for him, I was pleased to see him succeed.

Until this week.

In 2009, New York passed a temporary income tax surcharge on those earning over about $200k/year.  The surcharge is set to expire at the end of this year.  It’s the mirror image of the Federal ‘Bush tax cuts’ in that it’s a temporary increase in tax rates.

For the last few months, Governor Cuomo was insisting that he would not renew the surcharge.  But he’s apparently been worn down.  In the last two weeks, he has been talking about ‘using the tax code to create new jobs.’  I have no idea what that means.

And now this week, we have new income tax rates.  The highest rate is now 8.82%, well above the pre-surcharge rate of 6.85%, but below the surcharged rate of 8.97%.  For the rest of us, we get a 0.2% rate cut, or about 3-4% of the average New Yorker’s state income taxes.

Oh, goody: I got a tax cut.  It’s not enough to even pay for my daily newspaper, but I’m supposed to be all happy about it.

And if I earned millions, I could still say I got a tax cut, at least with respect to last year’s tax rates.

I still can’t see for the life of me how such tweakage will create one single job.

One thought on “Just Another Politician”

  1. The only way that the “tax code creates jobs” is via transfer payments and jobs for people to administer the transfer payments or possibly through public works and the administration of those projects.

    The lie of “tax cuts creating jobs” becomes clear when you consider why people hire someone: they need something done and they value their time more highly than the money that they would have to pay. Given my choice, I would hire people freelance and for a certain period of time with a maximum price that I would pay for the task with progress payments granted as parts of the project are completed. This is equivalent to a “firm fixed price” contract, and shifts the risk to the provider of the service.

    What legislators hope is that people will spend small tax cuts because they are too small to save. There was just a big deal made over the $20 a week that the average person/family gets from the Social Security “tax cut”. Very few people will save this money. I did, and I put aside an amount of money that is equal to what the FICA cut would be for a full year for 2012. Buying more products or services does not necessarily create jobs, particularly when inventory levels are at historic highs, as they are now.

    Tax cuts are wasted on the highest earners. They will tend to put that money into items that do not generate demand, such as savings, where tax cuts to lower-income workers will usually be spent immediately. We would do better to double or triple the standard deduction for everyone earning less than $100K, and the tradeoff is to end itemized deductions. If one wants to donate to charity, fine. Reduce what you would donate by your highest marginal tax rate, and you are where you would be if you could still deduct the donation. Tax deductions aren’t worth what we think that they are. Many people confuse tax deductibility with a tax credit.

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