Wall Street Journal editorial, The Two Left Coasts: Cuomo and Brown Decide to ‘Occupy’ Taxpayers:
New York and California were once America’s economic growth engines, but their political leaders seem determined to keep them sputtering. Their Democratic Governors are now pushing big new tax increases in the name of soaking the rich and balancing their budgets, as if that same strategy hadn’t put them in their current fiscal straits.
In New York, Andrew Cuomo announced yesterday that he’s agreed with legislative leaders to rewrite the state’s tax code to create four new tax brackets and rates. Mr. Cuomo is pitching this as “tax reform,” but that’s a ruse to disguise the fact that he’s repudiating his 2010 campaign pledge not to raise taxes on anyone while letting a previous income-tax surcharge expire on schedule at the end of this month.
This is the same Governor who said as recently as October 17 that “You are kidding yourself if you think you can be one of the highest-taxed states in the nation, have a reputation for being antibusiness—and have a rosy economic future.” The people who were really kidding themselves are voters who thought Mr. Cuomo believed what he said. With the “occupiers” in the streets of New York, perhaps this is Mr. Cuomo’s first left turn in his campaign for the Democratic Party’s 2016 nomination. …
Mr. Cuomo is also tossing out the most desirable part of New York’s tax code, which is its relative flatness, with a top income tax rate that would have been 6.85% next year (after the previous surcharge expires). The new code will include a “progressive” ladder: 6.45% for couples earning between $40,000 and $150,000, 6.65% from $150,000 to $300,000, 6.85% from $300,000 to $2 million, and 8.82% above $2 million ($1 million for individuals). …
[S]peaking of California, Governor Jerry Brown announced Monday that he’ll put a huge new tax increase on the ballot for voter approval next November. The income tax rate would rise by one percentage point to 10.3% for individuals making between $250,000 and $300,000, to 10.8% for those up to $500,000, and two percentage points to 11.3% for anyone making more than $500,000. All retroactive to Jan. 1, 2012.
The larger lesson here is the difficulty of changing the politics of union-enforced entitlement. Both states are dominated by public unions that refuse to allow serious reforms in pensions or state welfare spending and whose default policy is always higher taxes. Like Greece or Italy, the illusion is that you can chase revenue by raising taxes without regard to economic growth and the mobility of people and capital. …
[T]wo states are now taking one more whack at the people who create wealth, in order to redistribute more of it. For how that story ends, look to Europe.
