New York’s Tax Disgrace

Imagine this scenario: You’re struggling with bills, your income isn’t what it once was and you’re staring at a tax bill from the State of New York. As April 15 approaches, you decide that Albany will have to wait while you pay other bills.

Chances are the state’s Department of Taxation and Finance would not necessarily agree with your priorities. You’d probably hear from the agency within, what, a few days? And you can bet that the agency would not be particularly polite. 

More than a half-million New Yorkers face the above dilemma—in reverse. That’s right: They don’t owe Albany a cent. Albany owes them a refund. But even though they’ve filed their taxes, even though they’ve done everything by the book, they’re still waiting for their refunds. Why? Because Governor Paterson decided that the state doesn’t have the money, has other obligations and, in short, simply can’t afford to send excess revenue back to some 651,000 taxpayers. 

Yes, the state is in fiscal distress, although that is hardly the fault of taxpayers. Yes, Albany is confronted with very difficult choices (few of which have actually been made). But Mr. Paterson’s decision to delay payment of about $500 million in refunds is an outrage. Remember, that $500 million pot of money shouldn’t be in Albany’s hands at all. It belongs to individual taxpayers who were charged too much, but who now will have to wait for refunds until Albany gets its act together. Don’t hold your breath. 

Mr. Paterson delayed refunds due to be sent out from mid-March to April 1 in order to push the liability into the new fiscal year. By law, the state is supposed to send out refunds within 45 days, or it has to pay interest on the funds it has withheld. That, of course, means the liability will be even higher whenever Albany gets around to returning money to taxpayers. (The state says that it generally sends out nearly 75 percent of refunds within 30 days.) 

Suffice to say, if taxpayers engaged in these kinds of shenanigans, there would be hell to pay. 

The same should hold true when politicians keep money that doesn’t belong to them.