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New York Daily News


Rudy's Real Tax Record

August 06, 2007

By E. J. McMahon

In 2001, Rudy Giuliani presented his last executive budget. He and New Yorkers had some reason to smile.

The Rudy Giuliani presidential campaign is running a new radio ad boasting, among other things, that the former mayor "turned a $2.3 billion deficit into a multibillion-dollar surplus and cut or eliminated 23 taxes" during his years in City Hall.

Critics say the ad exaggerates - and strictly speaking, they're right. After all, while the mayor of New York is an exceptionally powerful executive, there's little he can do about taxes without cooperation from the City Council and the State Legislature.

Moreover, among the 23 tax cuts for which Giuliani takes credit are several initiated in Albany - such as STAR, a local tax break conceived in 1997 by former Gov. George Pataki. After the governor unveiled his plan, the mayor successfully pushed for more STAR in the city. But this fully state-funded tax relief program was ultimately Pataki's baby.

Anyway, Giuliani doesn't need a padded list to prove that taxes went down on his watch. When he left office, the city tax burden (relative to personal income) had fallen to its lowest point in three decades. Even allowing for revenue fluctuations due to economic cycles, this was an achievement - for which he deserves the lion's share of the credit. But Giuliani's record on taxes could have been better. For example:

  • He spearheaded elimination of the city's unique commercial rent tax outside Manhattan. But instead of repealing the rest of the tax, he sought (unsuccessfully) to use it as a dedicated revenue source to finance new stadiums for the Mets and Yankees.
  • The largest and most economically potent tax cut of the Giuliani era was the elimination of a 12.5% income tax surcharge - pushed by then-Council Speaker Peter Vallone over strong mayoral opposition. Giuliani and Vallone strenuously opposed the Legislature's repeal of the city commuter tax.
  • The 2001 partial rollback of another income tax surcharge, which is duly counted on Giuliani's tax-cut list, was in effect for only a year. In the wake of 9/11, Giuliani said it would be "dumb, stupid, idiotic and moronic" to use the attack as an excuse for raising taxes. But when the income tax surcharge was effectively restored by the Council a few weeks later, his protest was uncharacteristically muted (Rudy called the resulting tax increase "unfortunate," but said "the good part" would be added revenue to balance the budget).

On the spending side, Giuliani changed gears roughly halfway through his tenure. After allowing no real budget growth during his first term, he boosted spending by 23% in his second. While Giuliani faced an "out-year" budget gap of $2.3 billion left by David Dinkins, his last budget projected a $2.8 billion shortfall for his successor - before 9/11 blew a hole in the tax base.

To be sure, the projected future gap when Giuliani took office was much larger as a share of city revenues - and unlike Bloomberg, Giuliani also inherited a budget that already was in the red. But by the time he left office, spending growth had returned to unsustainable levels.

The Giuliani presidential campaign can cite a fiscal record that is reasonably conservative, especially by big-city standards. But inflating the former mayor's accomplishments in this area will only tend to magnify his shortcomings.

Original Source:



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