New York Gov. David Paterson observes that revenue from tax increases is running at least 20 percent below government projections and that the wealthy, as a group, were not paying more taxes there.
Thus far, New York had only collected about half of an expected $1 billion in income tax revenues from the state's wealthiest residents, reports Investor’s Business Daily.
"You heard the mantra, 'Tax the rich, tax the rich,'" Paterson opines. "We've done that. We've probably lost jobs and driven people out of the state."
Paterson is something of an accidental governor, having replaced Elliott Spitzer after his sex scandal drove him from office. Observers note Paterson quickly got rolled over by the big-spending wing of his own party.
The state legislature passed a budget for this year with $6.1 billion in projected new taxes and fees. The budget deal was sealed with steeper rates for folks earning more than $200,000 a year, but curiously called a “millionaire’s tax.”
Queried as to whether the budget was wise during the downturn, Paterson said: "None of this makes sense."
As a result of the lower tax revenues, Paterson this week ordered a spending cut in all state agencies totaling $500 million. Reports differ as to the overall decline in tax revenues for New York, ranging from 20 percent to as high as 36 percent.
The current-year deficit may grow to $3 billion, $900 million more than budget officials estimated.
A report from Bloomberg News indicates that the global recession bears some of the burden for the lower tax take too. Wall Street in 2007 accounted for about 20 percent of state revenue, but year-end bonuses fell 44 percent to $18.4 billion in 2008.
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