ZERO GROWTH TAX CUTS

ZERO GROWTH TAX CUT

I’ll bet you didn’t know that some New Yorkers are getting a tax cut, which was actually passed a year ago. But it’s not like the economy super-charging tax cuts passed by the Republican Congress and signed into law by President Trump. Upstate New York’s decades-long trend of out-migration (first in the nation) won’t change. The upstate economy will not reverse its decades-long decline. The budget for 2017 included the biggest (delayed) personal income tax cut since the 1990’s, which should be a cause for celebration, but sadly isn’t. Tax cuts are supposed to unleash buoyant optimism, what economists call Animal Spirits, the breath that awakens the human mind to limitless potential and possibility. New Yorkers aren’t talking about these tax cuts because the cuts are puny, and they take seven years fully phase in. Those who designed the cuts in this way are economic illiterates.

Here are the details. If you make between $42,750 and $321,050 your taxes will decrease a tiny fraction – .12% per year from 2018 to 2025, where the tax rate finally lands at 5.5%. But only if your income falls in that range. No other brackets see a cut. The least affluent and the most affluent New Yorkers remain strangled by the highest taxes in the nation. With their earned money captured by the rapacious New York State government, they have less to invest, save and spend as they see fit.

Freedom is a finite thing: either you have it or you don’t. When it comes to your money, New York State is in charge. When your money is controlled by the government, it will not generate growth, prosperity and jobs. After all, who is best able to decide how, what and where to spend your money, a distant government bureaucrat in Albany or you yourself? I’ll go with you every time.

Michael A. Morrongiello, Ph. D.

Who’s Pillaging You?

Governor Cuomo is very angry at Republicans in Washington for cutting taxes on most Americans but limiting the deductibility of state and local taxes (SALT) to a mere $10,000. He ranted to Alysyn Camerota on CNN: “What the Senate was saying was because we have no senators from the blue states, we don’t care, so let’s pillage the blue to give to the red.” Oh really? Our two Senators from deeply blue New York are both Democrats and like Cuomo, they love high taxes and big government. Democrats own New York state. They have a 2:1 advantage in voter registration. They’ve held every statewide office for 11 years.

Our taxes are 27% higher than the national average, and the highest in the nation. We have high cigarette taxes, alcohol taxes, gasoline taxes, natural gas taxes, electricity taxes, home heating oil taxes, you name it. We have onerous state mandates imposed on upstate by Albany that drive our property taxes through the roof. In Steuben County 90% of our county taxes go to pay for these mandates. In Chemung County it’s 100%. It sounds like an exaggeration, but it’s true, and it’s crippling us here in upstate New York. Not surprisingly, we are near or at the bottom of measures of personal freedom and business climate. Who proposed these taxes and who voted for them? Democrats like Cuomo, who’s been in office since 2011.

Cuomo crows about his puny middle-class tax cuts, a 1.35% reduction phased in over 7 years to cushion the blow – to whom? The government? Meanwhile, the latest census data peal like a funeral bell for New York. In 2017 New York led the nation in lost population- 190,000 people left. Since 2010 we have lost a million people, another first in the nation. In 2011, 1.3 people left for every one person who moved in. In 2016, the awful trend accelerated to 1.6 leaving for every one who moved in. We’re also aging. Our under-18 population fell 3.9% from 2016 to 2017. All of this well before the tax reform passed by Congressional Republicans.

Margaret Thatcher said, “The problem with socialism is that you eventually run out of other people’s money.” This is Cuomo’s dilemma. Instead of lowering taxes, he’s scheming to change them to payroll taxes or sham charitable contributions to grab all of your money that he can.

Here’s a suggestion for Cuomo: why not allow taxpayers to deduct their property, sales and other state taxes on our state income tax returns. If Cuomo truly reveres the SALT deduction, he should get right on board. Meanwhile, maybe he could stop whining about a situation that he and his party created in the first place.

Michael A. Morrongiello, Ph. D.

Reply to Mr. F.

Every attack by a progressive is an opportunity to persuade with facts and logic. Recently, I wrote an article about the House and Senate tax cut plans. I posted it on my Facebook page and on my blogsite. The Elmira Star-Gazette ran it on Sunday, December the 9th. It drew a rebuttal from Michael Fitzgerald, a writer from the Finger Lakes Times, who commented: “Quoting Calvin Coolidge-considering what happened in the year following his presidency (1929) is a poor choice to support any argument in favor of a poorly drafted, almost incomprehensible tax bill passed by the House and Senate. Perhaps use Herbert Hoover instead.”

Fitzgerald implies that the Coolidge tax cuts led to the stock market crash of 1929 and the Great Depression that followed, which is untrue. First, tax cuts do not lead to depressions. After taking office following President Harding’s death in 1923, Coolidge (like Harding) cut taxes throughout his term of five years. Mr. Fitzgerald implies that suddenly, Coolidge cut taxes and the Great Depression fell on us like an avalanche a year after he left office. If tax cuts were responsible for the Great Depression, then why didn’t the Kennedy tax cuts in the 1960’s and the Reagan cuts of the 1980’s cause depressions? They did not. They led to wide and deep prosperity, just like the Coolidge tax cuts of the 1920’s.

To Mr. Fitzgerald’s second point, “perhaps use Herbert Hoover instead,” I would never use Hoover, because his policies were essentially FDR’s.

Hoover raised taxes, raised tariffs and increased government spending. Hoover-Roosevelt policies failed to pull us out of a recession and turned it into The Great Depression. The Harding-Coolidge administration cured the depression of 1920, which was as deep and painful as the Great Depression. Roosevelt’s treasury Henry Morganthau testified before Congress on May 5th 1939. The New Deal was in its’ 7th year. Morganthau said:

We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises I say after eight years of this administration we have just as much unemployment as when we started And an enormous debt to boot!”

Why do Progressives attack when Republicans cut taxes? First, every religion has a creation myth. And so it is with Progressives and the Democrat Party: it’s that Roosevelt’s policies worked, and that a few so-called smart people can grow the economy by spending taxpayer dollars. But the myth must be preserved, because it burnishes the concept of central planning. Second, it must really annoy the Democrat Party that someone other than them can be Santa Claus. Al Smith, a Democrat stalwart of the 1920’s, said of FDR, “no one shoots Santa Claus,” referring to FDR’s plan, and that of every Democrat since: buy votes with taxpayer dollars. Only they can be Santa. But this betrays something deeper and more sinister. They believe they own all that we earn, and they “give” us what they think we need. Tax cuts at the margins create growth, and this puts to the lie all that they believe.

Michael A. Morrongiello, Ph. D.

DON’T FORGET SILENT CAL

A wise man once said that if you don’t learn from history you’re doomed to repeat it. Yet that’s exactly what the Republican House and Senate are about to do with their respective tax reform packages, which may not produce the robust growth they promise to deliver.

There is much to support in both versions: lowering the corporate tax, increasing the standard deduction and increasing the child tax credit, to name a few. But what both plans fail to do is to substantially cut marginal tax rates for the highest earners. We should fully protect private property rights, even those of our most well-off citizens. I can hear the lamentations of the left already: that’s a giveaway to the rich! Ah no, we’re not giving them anything: it was their money to begin with, because they earned it.

There are practical reasons for proposing tax cuts for high earners. High earners can put more money at risk, because they can afford to lose it. Therefore, they risk their money to make more money, in ventures that employ thousands and create opportunities for regular folks where none existed before. They create jobs.

History has proven that tax cuts for high earners expand opportunity for all. Way back in 1925, President Coolidge said, “The men and women of this country who toil are the ones who bear the cost for the government. Every dollar that we carelessly waste means that their life will be so much the more meager.” Translation: every day people worked to pay their taxes was a day they didn’t work for themselves and their families.

Coolidge cut taxes on the top earners form 73% to 24%. Everyone else’s taxes were also cut. The result? By the end of Coolidge’s term, 98% of Americans paid NO income taxes. The rich paid it all. Per capita income increased by 30%. Unemployment averaged 3.3%. Gross National Product, a measure of economic growth, grew at a faster rate than ever in US history. The roaring 20’s roared because of the Coolidge tax cuts.

Conservatives must always teach why their ideas will work, because they have worked, and other institutions (academia and the news media) will not say it.

Republicans have surrendered two important principles out of abject fear of criticism: one, no matter what your income level, your earnings are your property. Two, tax cuts for all creates prosperity, as proven by the Coolidge, Kennedy and Reagan tax cuts in the 1920’s, 1960’s and 1980’s.