Higher Taxes Won’t Work

Just when you thought common sense would prevail in Albany, Governor Cuomo is calling for what he refers to as

Just when you thought common sense would prevail in Albany, Governor Cuomo is calling for what he refers to as “comprehensive reform” of the state tax system. Translation: Mr. Cuomo wants to raise taxes on high earners.

Only a few weeks ago, Mr. Cuomo signaled that he understood the futility of raising taxes in a state known for being hostile to business. It seemed as though the governor was prepared to stand fast against his fellow Democrats, who believe they can tax their way to a balanced budget.

Now, however, it appears that the governor supports a tax hike of some sort—not an extension of the state’s misnamed “millionaire’s tax,” which Mr. Cuomo still opposes—but a tax increase all the same on the state’s top earners. If the governor is intent on reversing the gains of his first year in office, he could hardly come up with a better plan.

Mr. Cuomo deserves, and has received, credit for dealing with the state’s public employees unions in a rational, plain-spoken fashion. He helped save millions by working with union leaders to save precious jobs while extracting painful but necessary wage, pension and benefits concessions.

State government, however, remains mired in red ink. It is, frankly, too big and tries to do too much. But rather than attack the core issue—the usefulness and efficacy of state government—Mr. Cuomo appears prepared to take the easy way out by raising taxes on a portion of the population best able to pick up and relocate to a less-hostile state.

Preliminary reports suggest that under Mr. Cuomo’s plan, the surcharge on annual incomes greater than $200,000—the so-called “millionaire’s tax”—will be allowed to expire at the end of this month. But new tax brackets will result in some high earners paying more than they did before the surcharge, but not as much as they did with the surcharge.

There’s no question that Albany faces very difficult decisions on the eve of a state legislative campaign. This year’s budget has developed a $350 million hole, and for the fiscal year that begins on April 1, the state is looking at a $3.5 billion gap. And that’s after the governor and the state’s unions agreed to, in essence, freeze pay and cut benefits in return for job security.

Mr. Cuomo reportedly will call the Legislature into a special session any day now—never a popular move. That is a measure of his concern for the state’s fiscal health.

The urgency is welcome. But if these deliberations result in any sort of income-tax hikes, high-achieving New Yorkers will have reason to conclude that Albany doesn’t get it after all. Mr. Cuomo may be true to the letter of his pledge to end the millionaire’s tax, but in spirit, this would be a retreat from his pledge to change the status quo in government.

If New York is to regain its economic strength, politicians have to examine the size of state government, not the size of residents’ paychecks. Only then will true reform be achieved.

Higher Taxes Won’t Work