The Mission of the Manhattan Institute is
to develop and disseminate new ideas that
foster greater economic choice and
individual responsibility.

The New York Times.

Lazio Tax Cut Is Better for State, Conservative Group Says
October 12, 2000


A new study asserts that Hillary Rodham Clinton's tax cut plan would be less beneficial for New Yorkers than the one proposed by Representative Rick A. Lazio, because hers relies more on giving reductions to people who make certain expenditures and have incomes below specific ceilings.

The study, by the Manhattan Institute, a conservative research group, notes that salaries and the cost of living are higher in New York than in most states. As a result, plans that provide tax cuts to anyone in the country making less than a threshold often referred to as ''targeted tax cuts'' would exclude more people in New York than in some other states.

The report notes that the median income for a family of four is $50,200 nationally, $56,100 in New York State, $56,200 in New York City, and $83,100 in Westchester County. So tax cuts that are supposedly directed at an average family by imposing an income ceiling of say, $52,000, might exclude many of those in New York.

That conclusion is also true for the tax cut plan proposed by Vice President Al Gore, the Democratic presidential candidate. Gov. George W. Bush of Texas, the Republican candidate, has presented a more sweeping package that would benefit far more New Yorkers by reducing taxes for people with all levels of income.

Democrats have generally favored targeted tax cuts whose benefits go more toward the poor and middle class, arguing that some of the federal surplus should be used to pay down the national debt and shore up Social Security. The Republicans argue that those objectives can be achieved even with more broadly based tax cuts, and argue that the government should not reward people for making certain expenditures, and should give benefits to all taxpayers.

Middle-class families will ''fare better under Lazio's plan than under Clinton's, although most will receive less tax relief than under Governor Bush's plan,'' writes the author of the report, Edmund J. McMahon Jr. ''Lazio's plan is particularly beneficial to families earning the median income or above in New York City's suburbs.''

Mrs. Clinton has proposed a tax cut package for items like college payments, child care and retirement savings. Mr. Lazio has called for easing the so-called marriage penalty, repealing some taxes on Social Security benefits and allowing the payroll tax to be deducted.

Neera Tanden, the deputy campaign manager for the Clinton campaign, questioned the thesis and methodology of the report. She said the Clinton plan would in fact have more benefits for New York, relative to its overall cost. ''Hillary supports targeted tax cuts that meet the needs of working families,'' she said. ''Rick Lazio's trillion-dollar tax cut plan is fiscally irresponsible and threatens our current economic prosperity.''

Like Mrs. Clinton, Mr. Lazio has proposed initiatives that include income ceilings for their cuts, although Mr. Lazio's are more broadly based than Mrs. Clinton's. The Lazio plan's biggest reduction, allowing the payroll tax to be deductible, is limited to those in the 15 percent and 28 percent brackets (that is, up to $105,950 in taxable income for couples, the report says).

The report concludes that the Lazio plan would provide New Yorkers with $4.2 billion in tax cuts.

Dan McLagan, a spokesman for the Lazio campaign, said, ''We are pleased that the Manhattan Institute has joined the nonpartisan National Taxpayers Union in clearly showing that Congressman Lazio's economic plan is far superior for New York's families.''

The Clinton plan would cut taxes by $1.2 billion for New Yorkers, according to the report. But the Clinton campaign said the report left out a $1.8 billion cut for retirement plans. Mr. McMahon, the author, said that he had understood from campaign officials that the cut was intended to benefit businesses, not individuals, but that if there was a misunderstanding, the amount should be included and the total benefits should be $3 billion.

Both packages are dwarfed by the Bush proposal, which would give New Yorkers $11.1 billion in reductions. The Gore plan would save taxpayers in the state $3.5 billion, according to the report.

©2000 The New York Times



Home | About MI | Scholars | Publications | Books | Links | Contact MI
City Journal | CAU | CCI | CEPE | CLP | CMP | CRD | ECNY
Thank you for visiting us.
To receive a General Information Packet, please email
and include your name and address in your e-mail message.
Copyright © 2009 Manhattan Institute for Policy Research, Inc. All rights reserved.
52 Vanderbilt Avenue, New York, N.Y. 10017
phone (212) 599-7000 / fax (212) 599-3494