Score it a victory for common sense: Assembly Speaker Sheldon Silver, resisting the siren call of faux populism, has withdrawn his support for a big tax hike on New Yorkers who make more than $1 million a year. Mr. Silver’s decision means that the plan is dead. May it rest in peace.
As recently as this past August, Mr. Silver seemed willing to go along with a plan to add two new tax brackets designed to squeeze more tax revenue from the well-to-do. Under a plan cooked up by some of the so-called progressives in Mr. Silver’s caucus, the state would have increased the tax rate on incomes between $1 million and $5 million to 7.85 percent, up from 6.85 percent. The rate would be 8.6 percent on annual incomes greater than $5 million.
The tax hike actually passed the Assembly in August by an overwhelming majority, but the opposition of Governor David Paterson and the Senate majority leader, Dean Skelos, prevented it from becoming law. Now, with Mr. Silver’s change of heart, there’s no chance that the state will engage in the politics of self-destruction at a critical moment in its history.
Mr. Silver’s reversal could not have been easy. Some of his fellow Democrats truly believe that the state can tax its way out of the fiscal hole it has dug for itself. Others are more opportunistic than ideological: They would love nothing more than to brag to constituents about sticking it to the rich.
For a while, it seemed as though Mr. Silver would go along with the ideologues and the opportunists. But as the magnitude of the Wall Street meltdown became clear, Mr. Silver reassessed his position and chose responsibility over demagoguery. Not many politicians are willing to make that choice. Shelly Silver deserves a pat on the back for playing the role of a statesman at a time when New York so desperately requires genuine leadership
New York knows better than most states that high personal income taxes lead to economic ruin. A generation ago, New York’s high taxes drove residents and businesses to Connecticut, New Jersey, Pennsylvania and elsewhere. The city’s financial collapse in the mid-1970s was the result of many factors, but surely one of them was the flight of capital and high earners to friendlier states.
Under Hugh Carey, Mario Cuomo and George Pataki, New York got religion on income taxes, bringing down the top rate and, not coincidentally, enjoying a renaissance in the downstate economy. An increase in the income tax rate now, coming on top of the catastrophe in the financial sector, could easily reverse the gains of the last quarter-century.
That’s why Governor Paterson, a liberal Democrat, opposed the move. And, ultimately, that’s why Mr. Silver changed his mind. Responsible New York politicians understand that tax hikes will only drive more people out of the city and state—the last thing we need at a time when jobs are disappearing.
So kudos to Speaker Silver for having the courage to reexamine his position. He made the right choice. Let’s hope other New York politicians take notice and do likewise.