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January 18, 2018 | Cuomo Pledges to Defend New York Against Trump’s “Economic Missile”

Mike 'Mish' Shedlock

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
To make up for a loss of future revenue attributed to Trump, N.Y. Gov. Andrew Cuomo proposes a cornucopia of new taxes.

New York Governor Andrew Cuomo proposes a $168 billion spending plan to Defend New York Against Trump’s ‘Economic Missile’.

Gov. Andrew M. Cuomo on Tuesday unveiled a $168 billion spending plan that he said held echoes of the darkest days of the recession, necessitating a raft of ideas to raise revenue and counter a new federal tax plan that he warned could devastate some taxpayers.

“Washington hit a button and launched an economic missile and it says ‘New York’ on it, and it’s headed our way,” Mr. Cuomo said. “You know what my recommendation is? Get out of the way.”

Central to that escape plan is a proposal to create a statewide payroll tax on employers that could effectively eliminate the state income tax on wages for many employees.

Parallel System

Details on what a payroll tax would look like remained scant on Tuesday, with the governor and the state’s top budget official promising more information on Wednesday. But they seemed to envision a two-tiered process by which businesses could opt in to a payroll tax alternative, rather than a wholesale replacement of the income tax. The government might first designate certain categories of businesses eligible for the swap, and then those businesses could choose whether or not to participate, said Robert Mujica, the director of budget.

“We’ll run two parallel systems,” he said. “If there’s a desire not to make any of these changes, then you wouldn’t participate in the system.”

Mr. Cuomo conceded that the tax plan would be complicated but he pleaded with legislators on both sides of the aisle to embrace his plan for the state’s financial future.

The parallel system is a joke. It is guaranteed to backfire one way or another.

  1. It will stifle businesses with complications
  2. Only those businesses that will pay less tax will opt in

Other Plan Ideas

  1. Opioid Tax: A 2 cents-per-milligram surcharge for the active opioid ingredient in prescription drugs.
  2. “Internet Fairness Conformity Tax: A holdover idea that would require so-called “marketplace providers” like Amazon.com to collect sales tax.
  3. Carried Interest Tax: Cuomo reiterated a call for the closure of the carried interest loophole, a federal tax that allows some hedge fund managers to pay a lower tax rate on revenue from investments.
  4. A 3 percent increase in education funding, the largest chunk of state spending.
  5. An “Action Plan” for the MTA: $254 million for the Metropolitan Transportation Authority. This would be money taken from financial settlements and the accelerated transfer of funds from a tiny payroll tax paid in the 12-county M.T.A. service area.
  6. Same-Day Voter Registration

Not in the Plan

Spending cuts are not in the plan even though spending is a huge problem.

Cuomo’s speech was not entirely unsuccessful. It provided entertainment value for economic writers.

Mike “Mish” Shedlock

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January 18th, 2018

Posted In: Mish Talk

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