New York Governor Andrew Cuomo celebrated a significant political victory this week when he reached a compromise with the legislature on a $132.5 billion budget deal. The Governor deserves credit for leading a careful and brilliantly orchestrated political process that resulted in an on-time balanced budget. The Governor skillfully led the legislative leaders to a compromise. The political theater surrounding this victory will boost Cuomo's approval ratings and start the media mentions of his Presidential prospects in 2016.
The end of the federal stimulus package and the impact of the great recession on New York's tax receipts forced the state government's hand. Raising revenues has become the third rail of American politics, and for the foreseeable future, we will need to solve our social and economic problems without additional resources. An income tax surcharge on the wealthiest New Yorkers was eliminated, despite the size of the state's budget gap. It is amazing how the notion of paying one's fair share into a fund that builds community institutions has been completely de-legitimized. Everyone assumes that all government does is waste money and that all taxes are bad. It's gotten to the point that tax avoidance is barely an issue. Recently the New York Times reported that General Electric, the largest corporation in the United States, pays no taxes. According to a stunning story by N.Y. Times reporter David Kocieniewski:
"The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States. Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion. That may be hard to fathom for the millions of American business owners and households now preparing their own returns, but low taxes are nothing new for G.E. The company has been cutting the percentage of its American profits paid to the Internal Revenue Service for years, resulting in a far lower rate than at most multinational companies."
The company justifies this socially irresponsible behavior by arguing that its tax avoidance strategy is completely legal. The argument reminds me of the argument made by New York City political boss Tweed's henchman, the legendary George Washington Plunkitt, when he explained the difference between "honest graft and dishonest graft" in William L. Riordon's political classic, Plunkitt of Tammany Hall:
"I've not gone in for dishonest graft--blackmailin' gamblers, saloonkeepers, disorderly people, etc.--and neither has any of the men who have made big fortunes in politics. There's an honest graft, and I'm an example of how it works. I might sum up the whole thing by sayin': "I seen my opportunities and I took 'em." Just let me explain by examples. My party's in power in the city, and it's goin' to undertake a lot of public improvements. Well, I'm tipped off, say, that they're going to lay out a new park at a certain place. I see my opportunity and I take it. I go to that place and I buy up all the land I can in the neighborhood. Then the board of this or that makes its plan public, and there is a rush to get my land, which nobody cared particular for before. Ain't it perfectly honest to charge a good price and make a profit on my investment and foresight? Of course, it is. Well, that's honest graft."Just as Tweed evidenced no shame for his unprincipled actions, GE and similar corporations have no problem with "seeing opportunities and taking them." And that fact conditions the political reality that elected leaders like Andrew Cuomo must confront in state capitals all over America. Here is the problem: GE and all of the corporations in the global economy can locate their operations anywhere in the world. Once they settle in, they can always move if they get a better deal somewhere else. Modern communications, information and transportation technology make businesses highly mobile. Nations, states and localities must compete with each other to attract businesses.
One of the ways in which they compete is with tax policy for corporations and their executives. If New York's taxes are too high, businesses will move to Texas. If Texas raises taxes, the businesses might move to Mexico or China. If GE and similar companies don't push governments to help keep their costs down and their competition gets a better deal from another government, then GE loses its competitive edge. Of course the problem with all of this is if we don't have quality schools, a clean environment or safe roadways, our own society crumbles. Moreover, if we don't have a large middle class, then there is no one to buy the stuff that these global companies want to sell.
Anyone attuned to political reality is forced to accept the fact that for the near term, government will not be able to generate much additional revenue. If the economy picks up, some increased tax receipts will follow, but other than that, government will need to do more with less. That seems to be the conclusion reached by Governor Cuomo and his closest advisors. Undoubtedly there is waste in many government operations, but budget politics is not the same thing as management analysis. The agencies that get cut are not the most wasteful, but the ones least able to mount an effective political defense of their funding. In fact, if the government agency's work is particularly critical, inefficiency itself is rewarded as government "throws money at the problem."
While Governor Cuomo and his staff are celebrating their political victory over the state budget, it might be a good idea for them and for the rest of us to give some deep thought to the financial and political corner we have managed to paint ourselves into. It is true that New York's taxpayers need to get more value for the money we spend -- especially on education, health care and government pensions. It is also true that New York is more generous to its people than governments in many other states. But after we cut the fat out of government, the logic of the global economy will require that we cut into government's muscle as well. Then the collective services that the middle class depends on will erode. Education, transportation, health care and environmental protection will only be available to the rich. That will be the end of the middle class and the end of our political stability.
The only way out of this descending spiral is for the image of government to turn around and for people to once again believe that their tax money is well spent. While there certainly is waste in government, most government operations take place at the local level and most are efficient and effective. As for the global economy, the cost of doing business is not the only factor that influences business location decisions. An area's safety, entertainment, food, culture, natural beauty and talented workers are also part of the calculus. If price was the only factor, no one would live in New York City, Hong Kong, Bogota, London or Paris. While the self-regarding, anti-community mantra of the moment sometimes seems permanent, it will not last forever. I hope.
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Unlike manufacturing, which can boost productivity through automation, government provides services most of which cannot be automated without significant degradation in the quality of service or a cost that exceeds the savings achieved through automation.
On the other hand, government could achieve significant savings by doing fewer things that have no demonstrated benefit. For example, decriminalizing drugs and prostitution would enable government to get make significant reductions law enforcement and prison personnel, and also would enable a reduction (albeit not as large a reduction) in the number of prosecutors, judges, and related personnel.
The two biggest financial issues that impact state and local governments are legacy costs for pensions and health care. The rate of inflation in health care was grossly underestimated , as were the eventual pension costs for retirees who in many cases stop working after 30 years of service. No one in the private sector can retire at 52. In todays climate, it is difficult to argue that private sector jobs pay more. Reasonable measures must be taken to control pension costs, such as raising retirement ages , which for most of us are going to be 66-67. Furthermore, health care costs must be addressed not just to save cities and state budgets but to keep the US economy competitive at all.
Am I the only one who remembers a time when this was the case? Summers spent going to the PUBLIC library...to the PUBLIC parks and swimming in PUBLIC pools...and winter after schools ice skating in PUBLIC parks and graduating from a PUBLIC university? Oh, you mean you want your potholes in your roads repaired this winter? Corporations will always be concerned with profit first. City, state and federal taxes go to the common good.
The other thing that get me. Who thinks the private sector works? Am I the only one working in the private sector with folks who can't put two feet in front of the other and make something work? Their processes don't work, their products don't work...and yet we somehow think they are the answer.
AHHHH -- I think I'll start drinking early today.
I'm not sure the patient can be saved.
That one thought, skillfully and evilly planted by...a mediocre...actor...is rattling around in the heads of millions of Americans who don't seem to think much. It still reverberates. He spoke his part well.
And it is killing this country.
The only...let me repeat...the O-N-L-Y protection you or I or anyone else has against authoritarian corporatists is that very government that Ronnie castigated.
Think about it.
So, let's us little people just pony up.
OUR Kids don't need no education.
WE don't need no healthcare - we can just die, right?
We don't need no Social Security...that one's a real laugh - have you seen what percentage of the total population of this country absolutely DEPENDS on Social Security for retirement? Yeah, let's yank that out from under 'em. They don't need it.
Sure.
If you want some type of socialized medicine like the europeans have, then you have to pay for it the way the europeans do, through some type of national sales tax. Getting the right/conservatives to agree to socialized medicine in any form, funded through general revenues (i.e. income taxes) is never going to happen. Half the country pays no federal income taxes. The half that does pay income taxes, and is mostly covered by insurance anyway, will not be interested in paying MORE taxes if the lower half does not kick in something. Or....we can continue to engage in class warfare.
And while I nunderstand and somewhat agree on education, I still cannot figure out how education became an issue of national concern? Long before the Federal Governmnet ever got involved in education, we seemed to be doing pretty good (prior to Johnsons Great Society Legislation). If the news reports are to be beleived, our outcomes are a lot worse than they were 45 years ago. This after having spent multiple trillions of dollars from the Federal Governemnt alone. I have yet to see a good argument that says more money will make it better in light of the fact that more money, in the past, actually made it worse.
and the kids that aren't in school can just find something to do and if its a gang we can throw them in jail and call them bad, it won't affect the corporatists--they know what's best...besides they EARNED their money.
When they leave this country to live somewhere civilized they'll blame the moral fiber of the poor folk for ruining this country
Or Social Security? I'm sure you hate Social Security! Who needs that?
Well, at least two thirds of the population of this country. I assume you want all of them to starve.
OR Medicare. Now THAT's wasteful. Taking care of old people. A former German Chancellor implemented a plan to take care of that right before World War II. Worked great, too. Fewer useless mouths to feed. Great.
And especially NPR. We MUST destroy that, because it just might expose us for what we are...
Americans are a provincial people, often not interested in the rest of the world. If more Americans traveled, they would get to see the disaster of "low tax countries." They would get to see the dictatorships, the crumbling infrastructure, lack of clean water, lack of food inspectors, lack of emergency medical services, lack of honest police. The anti-government, anti-tax rhetoric is leading us in that direction. We need real republicans like Teddy Roosevelt who understood the danger in big corporations.
That was the first wave of change from the Republican Party of Lincoln to the Repugnut Party of Jim DeMint.
This report summarizes the key findings of a comprehensive 2007 Tax Foundation study of federal, state and local taxes and government spending. The results show that when we consider the distribution of government spending as well as taxes, it provides a dramatically altered view of how U.S. fiscal policy affects Americans at different income levels than is apparent from the distribution of tax burdens alone.
Overall, we find that America's lowest-earning one-fifth of households received roughly $8.21 in government spending for each dollar of taxes paid in 2004. Households with middle-incomes received $1.30 per tax dollar, and America's highest-earning households received $0.41. Government spending targeted at the lowest-earning 60 percent of U.S. households is larger than what they paid in federal, state and local taxes. In 2004, between $1.03 trillion and $1.53 trillion was redistributed downward from the two highest income quintiles to the three lowest income quintiles through government taxes and spending policy.
http://www.taxfoundation.org/research/show/2286.html
It's only irrelevant because it disagrees with your preconceived myth.
The poor clearly and obviously pay the least in income taxes but receive the most by far.
If you really think about it, you don't even need a study to prove it.
Try moving to reality.
Paying people to have more kids?
Spending more per pupil than all other nations except one and graduating dunces?
Trillions spent to reduce poverty and poverty remains at the same rate it did when we started spending?
Why not teach people how to succeed instead of paying them not to?
forced reductions in funding. Then everyone complains about how lousy the State services are and they start talking privatization. Raising taxes on business is never mentioned as an option because the plant can always relocate to Mississippi. This is how we work toward reaching third world status.
And get rid of all the other tax rules and loopholes for corporations. They all pay 5%, no matter what. Surely the Republicans will be happy about the lowering of the tax rate from 35% to 5%.