Before adjourning their 2006 session last week, state legislators approved the final pieces of a tax-break package tailor-made to buy votes but not, unfortunately, economic growth.
Some of the more ballyhooed changes are so small they may escape a typical taxpayer's notice. For example, if your family owns two cars and drives a lot, the repeal of sales taxes on gasoline purchases over $2 per gallon may save you a whopping $30 over the course of a year.
What the Legislature calls "marriage penalty" relief will save you and your spouse up to $27 (but not a penny if you choose to itemize deductions). The revival of the state sales tax exemption on apparel purchases under $110 will save you a little more.
The savings will mount for parents who can claim a new credit of $333 for each child between 4 and 17. This was the Legislature's alternative to Gov. Pataki's plan to grant families in low-scoring school districts a $400-per-child credit for educational expenses.
But by far the most attention last week was focused on a new property tax rebate, designed to generate an average 30 percent increase in homeowners' savings from the state-subsidized School Tax Relief (STAR) program. Rebate checks, timed for delivery just before Election Day, will be about $200 for most Central New York homeowners, $350 for
Property owners will welcome any break they can get. But like STAR, the rebate is unfair because owners of commercial property and apartment buildings don't qualify for it, and because the bulk of the money will flow to the wealthiest school districts. And it is sure to promote even
faster growth in property tax levies.
Generously defined to include the property tax rebate and the revived tax exemption on clothing, all of the "tax cuts" legislators claimed among their 2006 accomplishments will save New Yorkers a grand total of $1.5 billion in 2006-07, rising to $2.4 billion when fully implemented.
This is small potatoes compared to the spending side of the equation. Excluding federal aid, the state budget will grow by more than $7 billion in 2006-07 alone. In the next few years, spending is projected to continue growing at unsustainable rates, which will jeopardize even the modest tax rebates and credits enacted this year.
In the short run, the "targeted" tax policies popular in Albany may look like an effective way for politicians to curry favor with voters. But across-the-board tax rate cuts would do much more to promote economic growth in the long run.
Awash with surplus cash, legislators blew a golden opportunity to make our state more competitive.
Original Source: http://www.syracuse.com/poststandard/stories/index.ssf?/base/news-0/1151398872111460.xml&coll=1