New York may be about to get walloped by Washington again — only this time, with the blessing of the state’s own representatives in Congress.
That’s right: As E.J. McMahon of the Manhattan Institute’s Empire Center noted on these pages yesterday, most of New York’s heavily Democratic congressional crew is backing President Obama’s tax-rate hikes for higher-income folks — that is, folks who happen to live disproportionately in New York.
As part of the fiscal-cliff talks, lawmakers are also eyeing new caps on deductions, such as for local taxes, home mortgages, etc. — which will deliver a more painful blow to New York than other states.
And the stakes are ginormous.
Bad enough that higher rates, particularly for small businesses, will stifle the nation’s already feeble economic growth.
The consequences here may be even more dire. Remember, New York is a relatively high-income state; thus, New Yorkers already foot more than their share of the nation’s income-tax bill. In 2010, they carried 14 percent of the load, yet made up just 6 percent of the population. So they’ll be ponying up more than folks elsewhere if Obama’s rate hikes, on folks making as little as $200,000 a year, prevail.
But it’s the caps on deductions that could wind up being the worst news of all.
Start with the fact that New York taxes are among the highest in America.
Last year, Gov. Cuomo made the situation even worse by slapping top earners with yet another tax surcharge.
Yet for the moment, at least those taxes are deductible: If you’re forking over, say, a total of $15,000 to Albany and City Hall and paying the top federal rate (Obama would up it to 39.6 percent), then the deduction could save you almost $6,000. Cap it, and you’re on the hook for thousands more.
Likewise, a lower ceiling on mortgage deductions would squeeze more from New Yorkers whose mortgages dwarf those elsewhere, thanks to their pricey real-estate.
Sure, some New York millionaires may accept new caps and the higher taxes.
But many will look more closely at their no-longer-deductible local tax bill and wonder why they’re still in New York.
And should even a small percentage move, as McMahon notes, the loss in tax revenue could be devastating.
Now, given all this, you’d think New York lawmakers like Sen. Chuck Schumer would be screaming ’til they’re blue in the face to block tax hikes of any kind.
If so, we sure haven’t heard them. Then again, they’re mostly Democrats, and tend to fall in line behind their party’s leaders.
Again, Schumer and the rest of them represent New York — not Obama.
They need to remember that — and go to bat for the state. Fighting tax hikes.
Count on this much: We’ll be watching to see if they do. And letting folks know.