One of New York’s cycles of ever-increasing unearned privilege and injustice is the granting of special tax exemptions, exclusions, and benefits every time the economy is up (when doing so doesn’t require immediate and thus obvious sacrifices by those who don’t matter), and increasing tax rates every time the economy turns down (due to “circumstances beyond our control”). This bi-partisan policy is politically efficient: it shifts the cost of government to those who matter less, and forces them to pay for services and benefits for those who matter more.
Recently, however, there has been a partial retraction. The special $400 check to those rich enough to be able to own their homes is gone. And the special double income tax for the self-employed is gone for those earning $100,000 or less. I’ll give credit to the Freelancer’s Union and Councilmember Yassky for reducing the Unincorporated Business Tax, and remove blame from Mayor Bloomberg for the $400 check, accordingly.
Those who have followed my writing here know I am troubled by the tendency of government to award advantages to those who are already advantaged, and privileges to the already privileged. This turns government from a vehicle for collective action into a casino from which some emerge as villains and others as victims, one that most would be better off with as little of as possible. As the progressive era fades government, it seems, is returning to its roots as a means for the powerful to exploit the rest.
The $400 check was one such injustice. Those of us who own one- to four-family homes already benefit from having the increase in our property tax assessments limited in a way that renters, who are generally worse off, and businesses without special tax deals, do not. And in many cases we also benefit from the mortgage interest deduction. The $400 check was on top of that.
Neither the $400 check, nor the limitation on assessment increases are means tested in any way. That’s what makes them so tempting for and popular with elected officials, because given that most elections don’t matter and money to keep challengers off the ballot or spread lies about them matter more than votes, redistributing income up is a sure route to perpetual incumbency. The STAR program would ideally be next to go. Property taxes are high in the portion of New York State outside New York City for just one reason – spending is absurdly high.
As I have written previously, whereas my generation was given 401K s (to which the employer contributes little if anything) in place of pensions (which are only affordable for a privileged few), young people today are being denied health insurance as well, in addition to earning lower inflation-adjusted wages. To get around the requirement that all employees must receive health insurance equally in order for any to qualify for the exclusion of health insurance from taxable income, younger employees have simply been re-classified as “freelancers” or “independent contractors,” with their incomes reported to the federal government on 1099 forms rather than W2s. Those in older generations, and the higher paid, keep the tax-subsidized health insurance, while those in younger generations, who pay extra taxes to offset this, get nothing.
Nowhere in the U.S. is their greater willingness to disadvantage younger generations and diminish their future than in New York, which is government of, by and for those cashing in and moving out. So instead of paying just one local income tax in New York City, like employees of Goldman Sachs, members of public employee unions who live in the city, and employees of non-profit organizations, these young freelancers were forced to pay two. So were those who start new businesses. That is still the case, but only for those earning more than $100,000, a substantial reduction in the number of people New York sees fit to exploit.
The news wasn’t all good. To offset the perpetual increase in special goods and services not subject to sales taxes, most notably the exclusion of clothing made in China and so cheap it gets used and rapid thrown away, New York City increased its sales tax to a new high. I’ll bet lots of money is being distributed to politicians in exchange for that clothing exemption. And I guess it makes more sense for any individual industry to give the incumbents money for an exemption of their own than to ask why others don’t have to pay. Pony up, losers.
And in the MTA region the tax on wage earners and the self employed was increased, from the lowest paid the highest. Except the best off people don’t get wages: they take their income in the form of tax exempt sky high health insurance subsidies, rich tax free pensions, and capital gains, carried interest, and other investment income. Only the serfs will pay this tax, which is fair from the point of view of those with parking placards or BMWs, because to them only the serfs use mass transit.
But this is New York, so any reduction in unearned privilege and undeserved victimization has to be considered an upset.