How to Cut Taxes and Cut the Deficit

New York Gov. Andrew Cuomo is getting the message about income inequality in the United States. Cuomo is proposing a bill that would raise state income taxes on millionaires, while cutting them on the middle class. Right now, every New Yorker earning over $20,000 pays the same rate: 6.85 percent. Cuomo’s bill would create new income brackets.

The first, from $40,000 to $150,000, would be taxed at 6.45 percent. Those who earn $150,000 to $300,000 would have a 6.65 percent rate, while there would be no change for those making $300,000 to $2 million.

The tax on the top bracket, $2 million or more, would rise to 8.82 percent and expire in December 2014. Under the expiring surcharge, known as the millionaire’s tax, those earning more than $500,000 are taxed at 8.97 percent. Cuomo opposed a push by fellow Democrats to extend the millionaire’s tax.   

“New York has left the middle class with an undue burden which also hinders economic recovery,” Cuomo said in a Dec. 5 statement. “Fairness dictates that the more you make, the more you pay and the higher your income, the higher your rate.”

Cuomo governs one of the most unequal states in America. The Upper East Side of Manhattan, with its $20 million apartments, is less than three miles from the impoverished South Bronx. It’s no coincidence that the Occupy movement, a nationwide protest against economic inequality, began in New York City.

Gov. Pat Quinn needs to take a lesson from Cuomo and begin campaigning to change the provision in the state constitution that prohibits a graduated income tax. Illinois’s constitution was written in 1970, when income inequality was not nearly as big a problem as it is now. Good-paying industrial jobs were so plentiful that the nation was coming off four straight years in which the unemployment rate was never above 4 percent. The American middle class has never been larger or more prosperous than it was in the late 1960s and early 1970s.

A flat income tax may have been defensible then, but the nation’s economic structure has changed in the last 40 years. The gap between the wealthiest Americans and the poorest Americans is as large as it’s been since the 1920s. Illinois’s tax system was ranked 6th most regressive in the nation even before Quinn jacked up EVERYBODY’S income tax from 3 percent to 5 percent. Now, it’s even worse.

Cuomo’s bill will cut taxes for most New Yorkers while halving the state’s budget deficit. Those are Quinn’s two weakest spots. More reasons for him to emulate his fellow governor.

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