Go Ahead Tax the Net

The Speaker of the State Assembly, a man named Sheldon Silver, said the other day that some kind of tax increase-perhaps a surcharge-may be necessary to cover the state’s frightening deficits. This is a bit of a hoot, because the last time Mr. Silver weighed in on the subject of taxation, he did so as a tax-cutter or, more precisely, a tax-eliminator.

Mr. Silver is the man responsible for the elimination of the city’s commuter tax, which has cost New York $1 billion or so over the last few years. Now, you may think that this Sheldon Silver fellow is a Bush Republican, but in fact he’s a mainstream Democrat from the Lower East Side. He is mainstream in the sense that he makes deals based on politics and not policy or public welfare. He approved an end to the commuter tax not because he thought great benefits would accrue now that commuters would keep an extra 0.45 percent of their earnings. No, he approved an end to the tax because some Republican State Senate candidate upstate was yammering on and on about the demon tax, and Mr. Silver, being a Democrat, didn’t want the Republican to win.

So he told his fellow Assembly Democrats that they would call the Republican’s bluff-oh, they must have had a good laugh planning that one! “Get a load of this,” these Democrats charged with protecting the city’s interests said to themselves. “This yahoo up in Rockland County thinks he can win by screaming about the commuter tax? Well, we’ll launch a surprise counterstrike. We’ll support a bill to eliminate the tax, even though it will cost the city about half a billion dollars a year! Who cares? We can’t let nasty Republicans win that Senate seat because … well, because they’re evil. They’re the other team!”

Mr. Silver has the power to tell his fellow Assembly Democrats what to do because, as the Assembly Speaker, he hands out millions of dollars to his members so they can fund local projects and thus be proclaimed heroes. This is why they are re-elected with only token opposition. Voters remember that their local Assembly member stops by the community center with a check every two years. In Albany, it is assumed that if you do not show up with checks at community centers, you are destined for defeat and unemployment. So you do whatever it takes to keep getting those checks that Speaker Silver hands out. And if that means voting in favor of a bill that will cost the city half a billion dollars a year because that’s what the Speaker wants-well, you have to do what you have to do.

So the Assembly approved the tax elimination, and the Senate Republicans did likewise because, well, their bluff had been so cleverly called. George Pataki, who loves doing things that make people happy, signed the bill, and it became law-and, by the way, the Republican upstate won the election, and you probably couldn’t find seven non-politicians in New York who know his name. Rightfully so, since it doesn’t matter.

As of this writing, we don’t know whether Mr. Pataki will include any kind of tax increases, including temporary surcharges, in his bad-news-budget message. It would be stunning if he did, because it appears that governors in both parties read from the same political handbook, the one that defines “tax increases” as “a drastic measure certain to end the career of all who utter the phrase.” A picture of Jim Florio, the very former Governor of New Jersey, adorns this entry.

If Mr. Pataki wishes to be bold, he will have to do more than utter threadbare words adapted to his cadence from the original Sorensen. At his third swearing-in on Jan. 1, the Governor reminded us that his inaugural ceremonies represented not a victory of party, but a celebration of freedom, or liberty, or whatever else his speechwriters borrowed from John F. Kennedy’s inaugural speech. He chose discretion over valor and only hinted that maybe things might not be so pleasant in the near future.

Mr. Pataki’s colleagues around the country face similarly unpleasant circumstances. State governments have huge deficits (with California’s $35 billion leading the way) and few resources, because no one wants to become the next Jim Florio. Mr. Silver seems to think that New York’s case is special because of Sept. 11 and that the city therefore has a legitimate claim on more federal aid. Lots of luck selling that one.

Imagine, though, that under Mr. Pataki’s vigorous leadership, the nation’s governors demand of Congress and the President the right to collect a sales tax on goods purchased online. I haven’t the foggiest idea how that would work, but it seems clear that the current system is grossly unfair and downright dumb.

Amazingly enough, it was not created in the New York State Legislature. Go Ahead Tax the Net