Democratic Governors in California and New York Looking to Put Final Squeeze on Middle Class
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Decades ago, in the middle class golden age, New York’s wealthy faced a far heavier tax burden. In fact, since 1980, the top state tax rate on New York’s highest incomes has dropped by half.
So has the top federal tax rate, from 70 to 35 percent.
This shrunken federal tax rate on oversized incomes, observes Demos think tank senior fellow David Callahan, gives governors Cuomo and Brown a painless escape route out of the budget squeeze that now endangers their middle classes.
New York and California alone, notes Callahan, have more taxpayers making over $200,000 than all 22 states that John McCain carried in the 2008 Presidential election. These high-income taxpayers, under last month’s federal tax deal, will now enjoy at least another two years at the discount 35 percent top federal tax rate that George W. Bush shoved into place back in 2001.
Without this extension, the most affluent in California and New York would be paying federal taxes at a 39.6 percent rate. So why not, suggests Demos analyst Callahan, raise state tax rates -- from 10.5 to 15 percent in California and from 8.97 percent to 13.5 percent in New York -- to make up that difference?
High earners would then pay, with these higher state rates, about “the same overall tax rate they would have if the Bush tax cuts weren’t extended.”
Don’t hold your breath. Neither Brown in California nor Cuomo in New York sees any reason to inconvenience the financially fortunate. We’re just “going to have to reduce government spending,” as New York’s Cuomo insists.
For the awesomely affluent, that makes sense. Rich people, after all, don’t use public schools and parks and libraries. To live the good life, they don’t need government spending much money on all these public goods.
Only the little people do.
Sam Pizzigati is the editor of the online weekly Too Much, and an associate fellow at the Institute for Policy Studies.