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 User Rank
Silver NO RATINGS 
So. Everyone gets an income tax cut, and revenues increase?
Are cigarettes going up to $20 a pack?  User Rank
Blogger NO RATINGS
Like everything in New York, despite the promise of transparency, this deal that is in the works was the direct result of talks among the Governor and the two top legislative leaders. Many state Assemblymen and Senators didn't know the details until the respective bills were drawn up for consideration.
The devil is in the details, but the restructuring of the tax brackets is expected to bring in nearly $2 billion in additional revenue. How they came to that number has not been explained as yet. They still have another $1.5 billion to bring in to close the projected $3.5 billion gap. I will provide updates when I get more information.  User Rank
Platinum NO RATINGS
Who cares if cigarettes climb to $20 a pack?
 User Rank
Platinum NO RATINGS
John,
I was left shaking my head with disbelief when I saw the numbers in your blog. How is it possible for Tax revenues to increase if Tax cuts are implemented(and Tax brackets stay the same),unless the economy not just recovers but starts to roar along.But is it possible for a State with a Business environment as non-conducive to business as NY to grow sharply??? It ain't happening with all the obstacles that the State places in the path of business here. Also,are the bill creators expecting a lot of millionaires,etc who hide their income through tax shelters,etc to suddenly come out in the open and share it with the State(just because level of Tax has dropped a few basis points???) Otherwise,I dont see how this can happen and share the disbelief of rest of the crowd on this blog. Regards Ashish.  User Rank
Blogger NO RATINGS
I agree with Ashish's comment in that this is the typical smoke-and-mirrors in which politicians promise projected revenue they can possibly know nothing about.
User Rank
Platinum NO RATINGS
Scott,
Only a politican could conjure up tricks where Projected revenue way out in the future is used for existing commitments or satisfying existing constituents today. And when that Revenue falls short ( as is extremely common across States today);they go running first to the Federal Govt with begging bowl in hand ,then raise taxes and finally cut all manner of essential services(without attacking the core of the problem-which is excessive entitlements for State govt employees). Its a typical script, Just gets repeated again and again. Ashish.  User Rank
Platinum NO RATINGS
In other words, business as usual.
 User Rank
Platinum NO RATINGS
How is it possible for Tax revenues to increase if Tax cuts are implemented(and Tax brackets stay the same),unless the economy not just recovers but starts to roar along.
@Ashish, my guesss is when the tax cuts are implemented people will have more money to spend, and when the spending increases economy gets a boost. Do you agree ? User Rank
Platinum NO RATINGS
Anand,
I am afraid basic taxcuts will not work in today's sceanario. You need Job-creation(& especially sustained job creation first). People have to feel confident about spending then only they will spend.Othewise they will use their savings to first retire existing debts and then sock away the remainder for a rainy day.And once they start doing that,it becomes such a habit that economists and policy-makers will not be able to depend on Consumer Spending for a Growth boost(just like the Great Depression) Regards Ashish. User Rank
Blogger NO RATINGS
The job creation is coming from the governor's call for increased infrastructure spending and pushing up capital projects planned for 2013 to 2012. Devil is in the details on this one as well. Looks like additioal funding will come from public and private sources (i.e., pension funds).
User Rank
Platinum NO RATINGS
People have to feel confident about spending then only they will spend.
@Ashish, if that is the case then why did we see huge spending during black firday. Infact Black Friday E-Commerce Spending Up 26 Percent To A Record $816M. Looking at these figures we can't makeout we are facing financial crunch. User Rank
Platinum NO RATINGS
Anand,
Headlines alsways look extremely seductive.Its only when you get into the details that the real picture tumbles out. Hold on all on all the celebrations (The Economy or atleast the Consumer part is roaring ahead)for another month;those numbers were backed by unbelieveable promotions and sales cuts ,which means that margins must have collapsed dramatically. Also,I was looking through a Reuteurs report recently-It clearly said that most Americans have already finished their shopping for the year end(In November!!!); which means December looks set to be a total washout. So lets wait till retailers release their Sales & profit numbers for this quarter. Then we will know if this Recovery has legs. Regards Ashish.  User Rank
Iron NO RATINGS
It'll be interesting to see how this whole thing shakes out. John, have any more details trickled out?
User Rank
Blogger NO RATINGS
The additional revenue will come from the pockets of the well-to-do, or those joint filers earning $2 million or more or single filers earning $1 million.
The rate on this income bracket was supposed to be returning to a 6.85% rate due to the expiration of a three-year tax surchage on those earning more than $200,000 on Dec. 31. Their tax rate now goes to 8.82%, but is really a drop from the 8.97% rate they were paying prior to the Cuomo reform plan was enacted by the State Legislature earlier this week. I hope that explains it. I have a headache. User Rank
Platinum NO RATINGS
John,
Your not the only one!!! Ashish.  User Rank
Iron NO RATINGS
I like the bipartisanship, but I'm reserving judgement for more details.
 User Rank
Platinum NO RATINGS
yes, this seems a bit confusing. But I like the idea of lower taxes, even if it's a few hundred a year.
User Rank
Iron NO RATINGS
Hey, I'm just happy to see they aren't killing each other in Albany the way they usually do.
 User Rank
Platinum NO RATINGS
Maybe Cuomo's paramour Sandra Lee from FoodNetwork is keeping them all happy with her semi-homemade goodies, especially those cocktails she seems to fancy serving all day.
User Rank
Platinum NO RATINGS
According to radio reports, taxes will increase for those making over $2M annually.
NY needs to be careful not to over-count the expected revenue increase. If they don't consider how the rich will find ways to avoid the tax, they will plan more revenue than they see. Maybe a $40,000 tax increase isn't material to someone making $2M a year, or maybe it's the last straw that finally makes them move to New Jersey. The new bridge also benefits New Jersey, as a significant share of the trafic is only crossing New York state.  User Rank
Platinum NO RATINGS
New York still has a long way to go to lose its tax heavy reputation. People are here because of geography (manhattan) - not because of the political climate.
User Rank
Platinum NO RATINGS
PC,
There is another thing about Taxes which Politicans very conveniently ignore.Its the Laffer curve-The more you raise the Percentage of Taxes the more Tax Revenue tends to fall(and not rise). The reason being those that make that kind of money tend to be(usually) amongst the most mobile part of the population and would easily move to another state with a much lower Tax burden(or use tax shelters and various loopholes). End result will be the same Revenue will fall,not rise. More on that here https://www.mcssl.com/content/166063/CC/120911_CC_final.pdf A better solution for Politicians in New York would be to cut spending.Lets say they cut Salaries and Benefits for all Govt.Employees by 5%.Would that go a long way to balance budgets in the State? Most Definitely Yes. Of course this is a solution which trigger some revolts amongst the powerful lobbies who control Albany(and especially Govt Unions) but it would go down very,very well with the General Public. Regards Ashish. User Rank
Platinum NO RATINGS
A better solution for Politicians in New York would be to cut spending.Lets say they cut Salaries and Benefits for all Govt.Employees by 5%.
@Ashish, I feel its better to tax the riches heavily rather than cut the salaries and benefits of government employees. User Rank
Platinum NO RATINGS
Anand,
If you study tax-policy long enough you will learn about something called the Laffer Curve. Basically the more you raise taxes on a segment of the population,the less taxes you collect. This is particularly true about the richie-rich(whom you want to pay more taxes);they tend to particularly adept at usage of Tax shelters,Tax loopholes or else shifting to neighbouring states where Taxes are lower. End result-Tax collection from this segment will fall instead of rising. While Govt employees tend to be the least mobile segment of society(after all they depend on the State for their paycheck,where are they going to go otherwise???). Its a well-known fact that benefits for most Govt employees are beyond generous today(its totally insane)-You can retire with full pension at 52 and collect it for way longer than what you worked,with automatic COLAs(even if nobody in the Private sector can get a raise-Just like right now). So bringing these benefits more in line with the Private sector is not really a bad thing.and best way to do it is to implement the cuts super-quick. And we get to balance the State Budget in return as well !! Regards Ashish. User Rank
Platinum NO RATINGS
If you study tax-policy long enough you will learn about something called the Laffer Curve.
@Ashish, thanks for the info. I will definitely look into about Laffer Curve so that I get insight into the tax basics. User Rank
Blogger NO RATINGS
RE: The Laffer Curve. Does the Laffer Curve actually work though? Bush II proved that it can be disastrous if you don't keep the budget under control. The Laffer Curve only works if you cut budgets and use discipline in addition to lowering taxes.
At any rate -- we have lowered taxes, they are at an all-time low. So clearly something else is at work here. It's called an overleveraged shadow banking system.  User Rank
Iron NO RATINGS
I agree. Most people forget that 99% of government employees are regular people just like you and I. So cutting their salaries, benefits, etc sounds like a simple thing but what would you think if it happened to you in the private sector??
User Rank
Platinum
Phil.
Govt employees are NOT regular people like you and me(unless you too work in the Public Sector). In this recessionary environment most Private Sector employees have already seen their pay/benefits cut-Govt employees and their Unions continue to resist any such move to cut pay,bankrupting States and forcing major cuts in all manner of essential services all across towns & Cities in America.States are trying to raise Taxes,but with highly mobile workforces(&companies) most people just up sticks and shift to a more tax-favorable destination. Also,can you afford to retire at 52(with a full pension for life) in the Private Sector??? Govt employees can,even today. Not to mention automatic COLAs in their Pensions(Cost of Living Adjustments). Why not put them all on 401Ks like in the private sector for starters??? Lets also not forget to mention that there is NO competition(or worry about being fired in case of non-performance) for the Public sector,so it tends to encourage & attract all the worst elements of our workforce. Its the same case with Public Sector employees everywhere. For more info,read this book and check out Mike Shedlock.No one has written in more depth about this issue than Mish. http://www.amazon.com/Plunder-Employee-Treasuries-Controlling-Bankrupting/dp/0984275207/ref=sr_1_1?s=books&ie=UTF8&qid=1324226566&sr=1-1 http://globaleconomicanalysis.blogspot.com/2011/04/25000-out-of-70000-illinois-state.html http://globaleconomicanalysis.blogspot.com/2010/06/states-take-aim-at-pension-costs-public.html&sa=U&ei=VxjuTqPVO4PJmAXcnvHwCQ&ved=0CAgQFjACOAo&client=internal-uds-cse&usg=AFQjCNH__ZiOKP44eHAb4KntSAIcNSc http://globaleconomicanalysis.blogspot.com/2011/09/unions-sue-new-jersey-governor-christie.htmldDw Read these paragraphs very closely.You will understand and appreciate what I am talking about here. " Public unions' traditional strength - the ability to finance their members' rising pay and benefits through tax increases - has become a liability. Although private-sector unions always have had to worry that consumers will resist rising prices for their goods, public sector unions have benefited from the fact that taxpayers can't choose - they are, in effect, "captive consumers." At some point, however, voters turn resentful as they sense that: -- They are underwriting, through their taxes, a level of salary and benefits for government employment that is better than what they and their families have. -- Government services, from schools to the Department of Motor Vehicles, are not good enough - not for the citizen individually nor the public generally - to justify the high and escalating cost. We are at that point. " Regards Ashish. The blogs and comments posted on Investor Uprising do not reflect the views of Investor Uprising, PRNewswire, or its sponsors. Investor Uprising, PRNewswire, and its sponsors do not assume responsibility for any comments, claims, or opinions made by authors and bloggers. They are no substitute for your own research and should not be relied upon for trading or any other purpose. |
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