Cuomo’s tax stance rankles liberal groups, again

Andrew Cuomo. (saebaryo via flickr)
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ALBANY—A number of left-leaning groups fear that Andrew Cuomo is siding with conservatives on tax policy, and undermining their longstanding push to close corporate tax loopholes.

The governor on Wednesday appointed a commission to look at ways to reduce tax rates going into his re-election-year budget. It is the second tax-reform commission he's appointed in the last 10 months.

Business groups who won a seat on the panel cheered, as did Republicans who control the State Senate in a coalition with four Democrats.

The worries seem to begin there for advocates of progressive tax policy, with Cuomo's appointment of Republican former governor George Pataki as the panel's co-chair.

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“It's like bringing in Godzilla to oversee the rebuilding from a Godzilla attack,” said Michael Kink, the executive director of A Strong Economy for All, a labor-backed coalition. “Pataki took a tax system from progressive and fair to regressive and unfair. He basically created the property tax crisis by cutting income taxes and shoving the burden down to the property tax payers.”

The tax-cutting move also seems to run counter to Democratic mayoral nominee Bill de Blasio's plans to raise income taxes in New York City to expand pre-K. Cuomo endorsed de Blasio, but has been silent on his tax plan, which would require the cooperation of Albany.

On Wednesday, De Blasio told reporters in Red Hook that his plan was a “very different from the question of what taxes the state assesses directly.”

While Cuomo is a Democrat, he has frequently distanced himself from his party, and has styled himself a centrist on fiscal policy. He's kept state spending increases to two percent each year, imposed a cap on the allowable increases in local property taxes and resisted efforts in 2011 to renew a 2009 income tax surcharge.

The dynamic now feels a lot like the dynamic then. Some major labor groups like the ones in Kink's coalition are loath to cut state revenue because they want to see spending increases for government services like education. In some cases, their members' salaries are funded by government. Historically, they've been the most potent lobbying forces in Albany.

But Cuomo spurned them early in 2011, and looked on approvingly as the Committee to Save New York—a coalition of business leaders, real estate magnates and a private-sector labor group—vastly outspent them in his first budget cycle. The unions kept up the pressure, using the Occupy protests as a stage.

In December of that year, Cuomo gave in, renewing most of the expiring surcharge. But since the rates were still in effect, he worked hard (with Republican support) to spin the changes as a tax cut. Attached to that agreement was a promise to create a commission that would look at the tax code.

At the time, this was largely seen as a favor to business groups who felt stung by Cuomo's tax policy and hoped it would be a way to get their voices heard on changes they liked. The governor didn't get around to appointing its members for a year. He chose banker Peter Solomon and Carl McCall, a former comptroller and political rival, as its co-chairs.

According to James Parrott, an economist with the labor-backed Fiscal Policy Institute who won a seat on the commission, it has met roughly a dozen times since.

“We had been, certainly, talking a lot about expanding the circuit breaker on the personal income tax which is a way to provide property tax relief to a household based on its ability to pay,” said Parrott. “We were also looking at what we should recommend to the governor about what the permanent personal income tax structure should be. … We were looking at some corporate tax reform ideas that have been floating around for a couple of years, and some time looking at the tremendous cost of the business tax credit programs in New York, and how to scale them back. There's not really a good analysis of what they deliver.”

Both the Solomon Commission and the Pataki Commission are expected to issue reports in December. (And both have the same co-chair: former Comptroller H. Carl McCall.) But the fear on the left is that Cuomo will embrace the Pataki report's recommendations and let Solomon's work fall by the wayside. Several people following Solomon's work and curiously eying the latest effort said he had been effectively sidelined.

“What we are seeing is a governor who does not want a thorough and balanced review by an objective tax commission and who is creating what should be called the "Commission to Endorse the Governor's Tax Cut Plan,'” said Ron Deutsch of New Yorkers for Fiscal Fairness, another progressive group that argues for government spending and, often, raising taxes. “The governor should just appoint himself as the head of every commission he sets up since he is clearly calling the shots.”

(Solomon declined to be interviewed, and said in an e-mail that, “I have no comment other than the goal of our commission is to respond to the governor's mandate.”)

Cuomo said the commissions have discrete mandates, and referred to Solomon's effort as a “tax simplification commission.”

“Let's take the state code and let's simplify it. It doesn't have to be as complicated as it is … which in and of itself is an advantage to businesses and taxpayers,” the governor said, noting its charge was revenue-neutral. “This commission, the charge is, in many ways analogous but focused on tax relief.”

Gubernatorial aides said the two commissions would work in parallel. But Republicans, and business groups, indicated much more enthusiasm for the Pataki panel.

“I commend Governor Cuomo for joining Senate Republicans in making tax cuts for middle class families and businesses a top priority. New Yorkers are overtaxed at all levels of government,” Senate Republican Leader Dean Skelos said in a statement.

Brian Sampson, the executive director of the group Unshackle Upstate, said, “Reducing our massive tax burden is essential to a stronger economy and a brighter future for all New Yorkers. We look forward to working with this commission, as well as the governor and Legislature, to deliver broad-based tax relief to struggling families and employers.”

Assembly Speaker Sheldon Silver, through a spokesman, offered this succinct response: 

“The Governor is free to pick whoever he wants to advise him,” he said.