norma156 member for 31 weeks 1 day Send a message

Yesterday, The Wall Street Journal ran an interesting editorial on the condition of New York State mid-way through the financial meltdown. (I say mid-way because we're not through this yet and Secretary Paulson's announcement yesterday that the feds are changing the rules of the giveaway game will exacerbate banking conditions. But that is another subject.)

The Journal pointed out that for years, New York state has relied upon Wall Street to pay an outsized share of state income taxes. According to John Cape, a former state budget director, about 45,000 New York taxpayers provide the state with "anywhere from 20% to 30% of total income tax receipts."

Hmmm. Does anyone else see the danger of making a state dependent upon relatively few taxpayers?

The Journal points out that the state's budget deficit is projected to be $1.5 billion and that its governor projects it could grow to $14 billion in TWO years if nothing is done.

To Governor Paterson's credit he is pushing for budget cuts. New York spends more money per pupil ($14,000) than any other state. Medicaid costs $2,260 per resident, twice the national average and equal to Texas and Flordia combined.

Labor and liberals are calling for increased personal income taxes.

But Wall Street is unlikely to come back roaring. The financial services industry is already leaner and is going to slim further. (This morning, Citigroup announced job cuts of 10,000. Citi is headquartered in New York.) It's likely to be more risk adverse. And it's likely to be more heavily regulated (including salaries of top executives).

The gift that kept giving during the long bull market just quit.

So, my "tax the rich" friends, what is your prescription for New York? And what parallels do you see, if any, in the national economy?