Thursday, November 13, 2008

New York, New York

Let's tax the rich. That is the liberal solution to all budgetary matters and certainly one espoused in New York. Here in this "progressive" state, the credit crisis will be a particular problem since the state relies on such a high proportion of its income from wall street. The financial services industry employs between 2 and 3 % of the non-government workers in the state---the same as in the 1970s. The problem, however, is this is 212,000 people making $80 billion in wages last year. The taxes paid by these workers is progressive so there is a great dependence of the state on relatively few people. One estimate has 45,000 taxpayers in New York providing 20 to 30% of total income tax receipts.
So, here we have a year when these workers are being fired, the ones working are getting no bonuses, others are leaving for lower tax states, and attempts to meet the budget shortfall through budget cuts is being resisted by public employee unions, teachers unions, etc.
One thing to look for in the coming reaction to the recession is the howls from cities and states with powerful labor unions and progressive tax codes, e.g., California, Michigan, New York, New Jersey and others.

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