Pataki tax panel dims prospects for hike on NYC wealthy

New York’s Gov. Andrew Cuomo said Wednesday his administration would focus its agenda in the coming year on “tax relief,” announcing he’d chosen former Gov. George Pataki, a Republican, and Democratic former state comptroller H. Carl McCall to to head a commission charged with finding ways to lower New Yorkers’ taxes by at least $2 billion in 2014.

The involvement of the former governor in Cuomo’s ongoing tax-reform efforts could bode badly for the Democratic nominee for New York City mayor, Bill de Blasio.

Governor Cuomo has yet to weigh in publicly on a proposal from de Blasio to hike income taxes on the city’s top earners to pay for universal pre-kindergarten, and de Blasio said recently he believes Cuomo is “open” to the idea. But E.J. McMahon, a senior fellow at the conservative-leaning Manhattan Institute, said the symbolism of Cuomo’s announcement suggests it is less likely the governor will support the proposed increase.

Former New York State Governor George Pataki (left) and ex-Comptroller H. Carl McCall (right), were appointed by by Gov. Andrew Cuomo (center) to co-chair a new commission charged with cutting property and business taxes. AP Photo/Jim Fitzgerald

Former New York State Governor George Pataki (left) and ex-Comptroller H. Carl McCall (right), were appointed by by Gov. Andrew Cuomo (center) to co-chair a new commission charged with cutting property and business taxes. AP Photo/Jim Fitzgerald

“If the Democratic governor heading into his reelection has just named a prominent Republican supporter of supply-side economics to head his tax commission, it signals that the odds just got longer against it,” McMahon said of de Blasio’s proposal.

De Blasio “wants to throw into the mix another significant income tax hike on what is basically the engine of the state’s economy. That’s something you’d think has implications for Cuomo’s two different tax commissions, and it’s certainly not consistent with anything you’d call tax relief,” McMahon said.

A spokesman for Governor Cuomo pointed to the governor’s remarks made last month, in which Cuomo pledged to wait until January, after the new mayor takes office, to discuss de Blasio’s tax proposal. A spokesman for de Blasio did not respond immediately to requests for comment.

The commission’s focus and Cuomo’s appointment of Pataki riled some liberal fiscal policy groups, who questioned the need for tax cuts. Former Democratic Assemblyman Richard Brodsky, now a fellow at Demos, a liberal-leaning economic think-tank, agreed.

“The notion that tax cuts stimulate economic growth does not seem to have been proved,” he said. “And the notion that there would be a stimulative effect on New York’s economy — this is the first question that folks would have to address.”

Cuomo said he hoped the commission would focus on property taxes, which he said totaled $50 billion statewide last year.

“We also are asking the commission to review any taxes they believe are unduly burdensome to businesses and to families,” said Cuomo. New Yorkers, the governor warned, could readily move to other states with more favorable tax climates.

“One of the core elements of my 12 years was cutting taxes,” Pataki said Wednesday of his three terms as governor, adding, “quite simply, the taxes are still quite high.” In 2003, Pataki claimed that he’d made New York the “tax-cutting capital of the nation,” cutting 19 different taxes 63 times.

But the former governor might not be the best model for general fiscal restraint. The state’s debt burden doubled during his administration, and state spending rose at nearly 2.5 times the rate of inflation. In 2002, the Pataki Administration and legislative leaders agreed to allow five of the state’s public authorities to go on a massive borrowing spree,issuing more than $30 billion in bonds secured by New Yorkers’ personal income tax payments to pay for public works projects. About one out of every four dollars in income tax revenue the state receives now goes to a fund paying off debt on those projects.

“Governor Pataki’s record of fiscal stewardship is unmatched. In addition to his record of cutting taxes, Governor Pataki left the state with billions in surplus, 1 million fewer people on welfare and the lowest unemployment rate in over fifty years,” Governor Pataki’s spokesman David Catalfamo wrote in an email.

“There’s a lot of criticisms you could make of [Pataki’s] fiscal stewardship, but with one exception, the cigarette taxes, he deserves a reputation for being a pretty steadfast tax cutter,” said E.J. McMahon, who helped Pataki draft a personal income tax cut in 1995. McMahon said it was absolutely fair to criticize the former governor for the growth of off-budget expenditures and debt as well as PIT bonds. The bonds, which allowed lawmakers to spend freely, “were like sending [the legislature] another credit card in the mail,” he said.

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