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MI Responds: New York's 2018 State of the State Address

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MI Responds: New York's 2018 State of the State Address

January 4, 2018
Urban PolicyNYC

Manhattan Institute fellows say Governor Cuomo's speech at the 2018 State of the State Address left much to be desired

Steven Malanga, George M. Yeager Fellow:

In his State of the State address today, Gov. Cuomo touted what he called the state’s “remarkable economic and social progress,” including increases in the minimum wage, paid family leave and other initiatives. He proclaimed New York “the progressive capital of the nation.”  At the same time, the governor suggested that the state’s “progressive philosophy” is being questioned and threatened, a clear reference to the Trump agenda in Washington that is often at odds with Cuomo’s agenda. 

Yet as he touted the state’s achievements, one thing Cuomo neglected to mention among references to all of those numerous “progressive” achievements is that New York remains the most economically unequal state, with a higher Gini Coefficient, which is used to measure equality, than any other place in America, and that other high-tax, high-regulation states like California and Connecticut are nearly as unequal. Nor did Cuomo point out that the state’s largest city, New York, governed by a progressive mayor, is also one of America’s most unequal municipalities. The disconnection between Cuomo’s rhetoric and the reality of New York state remains startling, and only by ignoring the state’s striking inequality can Cuomo continue to believe that policies like raising the minimum wage, which research has consistently shown destroys low-income jobs, can actually make New York a more “progressive” place.

Instead Cuomo should be focused on stimulating general economic growth, which research shows is more effective at reducing inequality than the kind of narrow economic gains that occur in a high-tax, highly-regulated place like New York.

Nicole Gelinas, Senior Fellow:

In his transit and transportation proposals, Gov. Cuomo is repeating his past mistakes: proposing new projects without a way to pay for them. A new Metro-North station in Woodbury Commons and a new subway line to Red Hook, Brooklyn, for example, may be worthy projects in a vacuum, but should not be the state’s top priorities for the Metropolitan Transportation Authority when it faces tens of billions of dollars’ worth of backlog in repair, replacement and maintenance to its existing transit system, and when it still cannot complete far more critical projects such as subway-signal modernization on time and on budget. 

E.J. McMahon, Adjunct Fellow:

During his State of the State message today, Gov. Cuomo promised to “explore … a major shift in tax policy” by restructuring the current income and payroll tax system. Such an attempt to replace New York’s no-longer-fully-deductible personal income tax (PIT) with an employer payroll tax would be fraught with mind-bending complications and unintended consequences. “Getting out of the way of the arrow” this way would require an additional administrative burden on businesses, cooperation from workers themselves and fails to take into account government and nonprofit sectors. Instead, as I detail in my open memo to the governor and Legislature, the state should decouple from federal law where necessary to preserve the existing PIT structure, phase out the state “millionaire tax,” follow through on middle-bracket PIT cuts, permanently enact the state cap on local property taxes and eliminate the punitive “cliff” rates on the smallest estates still subject to taxation. Finally, the governor and Legislature should not forget the highest priority of all: reducing government spending across the Empire State.

______________________

Steven Malanga is the George M. Yeager Fellow at the Manhattan Institute and a senior editor at City Journal.

Nicole Gelinas is a senior fellow at the Manhattan Institute and contributing editor at City Journal. Follow her on Twitter here.

E.J. McMahon is research director of the Empire Center for Public Policy and an adjunct fellow at the Manhattan Institute. 

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