Politics on the Hudson

FROM HOUSE SPEAKER JOHN BOEHNER’S PRESS OFFICE: “Today, Speaker Boehner called President Obama to discuss the Speaker’s desire to provide a full year of tax relief for American families before December 31st. With Senator Reid having declined to call his Members back to Washington this week to join the House in negotiating a full-year extension of the payroll tax cut, the Speaker proposed that the President send members of his economic policy team up to Congress to find a way to accommodate the President’s full-year request. The Speaker explained his concern that flaws in the Senate-passed bill will be unworkable for many small business job creators. He reiterated that if their shared goal is a one-year bill, there is no reason an agreement cannot be reached before year’s end. The President declined the Speaker’s offer.”

FROM THE WHITE HOUSE: Speaker Boehner called the President this morning and the President reiterated to the Speaker that the only viable option currently on the table is for the House of Representatives to pass the bipartisan Senate compromise that received the support of nearly 90 percent of the Senate. The President told Speaker Boehner that he is committed to begin working immediately on a full-year agreement once the House passes the bipartisan Senate compromise that prevents a tax hike on 160 million Americans on January 1.

Democrat Justin Wagner, who wants to unseat Republican state Sen. Greg Ball in 2012, called for the state to keep a tax in place on those making more than $1 million a year. New York’s millionaires tax, which affects individuals who make more than $200,000 a year, is set to expire at year’s end.

“It is fundamentally unfair to cut taxes for millionaires and at the same time expect poor and middle class New Yorkers to do more with less. We cannot allow that to happen,” Wagner said in a statement

Wagner on Wednesday proposed allowing the tax to remain on those earning seven figures. Two-thirds of that revenue, he said, could be set aside and used for education funding. The money would be outside the usual budget process and available through an application process.

“The long-term solution to the problem of income inequality is an education system that prepares all of our children for the new economy, and the need to provide our children with a quality education is greater than ever.  The pace of economic and technological change requires a newfound commitment to education” Wagner said.

The rest of the money could be used to close the state’s budget gap.

Gov. Andrew Cuomo has long said he’s opposed to letting the millionaires tax continue. But on Wednesday he spoke of possibly making changes to the tax code and, as my colleague Joseph Spector pointed out, that may include proposing higher taxes on the wealthy.

The average New York household would pay $600 less in payroll taxes next year under a proposal being pushed by Senate Democrats.
A family earning the state’s median income of $54,554 already will pay $1,090 less this year under a 2-percentage-point reduction in payroll taxes that began in January.
That tax cut expires at the end of this year, but Senate Republicans announced this week they will back a one-year renewal.
“It’s a huge step in our direction that they are now saying they want to support this kind of payroll tax cut,’’ New York Sen. Chuck Schumer said in a conference call with reporters Wednesday.
But Senate Republicans aren’t supporting President Barack Obama’s proposal to cut the payroll tax in half – by 3.1 percentage points – next year. Obama also wants to cut employers’ share of payroll taxes if they hire new workers or give employees raises.
The White House said Wednesday the proposals would provide a $12.8 billion cut in payroll taxes for 10.3 million New Yorkers in 2012, compared to $7.8 billion this year.
Nationwide, it would provide $179 billion in tax relief next year, the administration said.
Senate Democrats want to offset the cost of the tax cut package by enacting a one-year, 3.25-percent income tax surcharge on millionaires, but Republicans oppose that.
Republicans released a plan Wednesday that they said would cover the cost of renewing the 2-percentage-point payroll tax cut for one year while reducing the deficit by $111 billion.
The plan would freeze salaries of federal civilian workers for three years, reduce the federal workforce over time by 10 percent—or 200,000 employees—and begin means testing for federal benefits such as health care, unemployment benefits and food stamps.
“Republicans will put aside their misgivings and support this extension,’’ Senate Minority Leader Mitch McConnell of Kentucky said Wednesday, prior to the release of the GOP plan. “Not because we believe, as the president does, that another short-term stimulus will turn this economy around, but because we know it will give some relief to struggling workers out there who continue to need it nearly three years into this presidency.”
Schumer, who’s pushing for passage of Obama’s plan, released county-level data comparing the impact of the payroll tax cut now in effect to the larger one proposed by Democrats.
In Westchester County, where the median income is $77,057, the difference is $848 ($1,541 compared to $2,389).

New York Sens. Chuck Schumer and Kirsten Gillibrand split their votes today as the Senate headed toward overcoming a key procedural hurdle toward passage of an $858 billion package of tax cuts and unemployment benefits.
Gillibrand was six Democrats who opposed the measure during the first hour of voting while Schumer joined in the lopsided majority who were voting to prevent a filibuster.
At 3:50 p.m. the Senate still need three more votes to reach the 60-vote supermajority.

4:12 p.m.—PASSAGE. The vote now stands at 62 to 7. The seven no votes are Democrats Kirsten Gillibrand of New York, Sherrod Brown of Ohio, Russ Feingold of Wisconsin, Patrick Leahy of Vermont, Jay Rockefeller of West Virginia and Mark Udall of Colorado as well as independent Bernie Sanders of Vermont.

Should New York become jealous of New Jersey?

Gov. David Paterson today congratulated New Jersey’s Gov. Chris Christie and the Garden State’s Legislature for passing a  cap on the annual growth of property taxes at no more than 2 percent.

Paterson, who pushed for a 4-percent cap on local property taxes, said New Yorkers are still feeling the pain from the highest property taxes in the state.

“Passage of the tax cap was fair, fiscally responsible, and in the best interest of New Jersey families. Unfortunately, we New Yorkers are still waiting and suffering needlessly,” Paterson said in a statement.

The governor made a last-minute push for New York’s property taxes to be capped at 4 percent, but the measure was packaged with several controversial proposals such as selling wine in grocery stores. The issue never came to a vote in the Legislature and lawmakers left Albany without passing any property-tax relief.

“Congratulations to New Jersey’s long suffering taxpayers. Thanks to an effective, bipartisan effort between the state’s governor, Assembly and Senate, New Jersey home owners will now benefit from a welcome and much needed two percent cap on their property taxes with limited exceptions that puts final authority to exceed the cap in the hands of the taxpayers themselves. The new cap, which will be signed into law today by Republican Governor Chris Christie, passed the Democratic Legislature overwhelmingly, with a 73-4 vote in the Assembly yesterday, and by a 35-3 margin in the Senate last week.

Here’s the full statement:

“Passage of the tax cap was fair, fiscally responsible, and in the best interest of New Jersey families. Unfortunately, we New Yorkers are still waiting and suffering needlessly. Whereas New Jersey’s elected officials have found a way to put aside partisan sniping and election-year opportunism for the greater good of their state, New York officials have yet to come together to bring relief to our own constituents—this despite the fact that three out of four New Yorkers support a property tax cap.

“Our elected officials in Albany need to take a similar stand against runaway property taxes, and I am calling on the leaders of the Senate and Assembly to commit to taking an up or down vote on a property tax cap before the November elections. Every legislator in Albany should publicly state where he or she stands on this critical issue so that voters know who supports property tax reform. Increased State spending is not property tax relief, no matter how Albany politicians spin it during an election year. Spending increases lead to higher property taxes, which is why I vetoed $600 million in Legislative additions to the State’s education budget.

“I want to commend New Jersey’s Governor Christie, Senate President Steve Sweeney, Minority Leader Tom Kean, Assembly Speaker Sheila Oliver and Minority Leader Alex DeCroce for putting their political differences aside to bring real property tax relief to New Jersey families.

“Now it is time for a similar agreement in New York, where families have waited long enough for property tax relief. And if Albany fails to deliver once again, those New Yorkers may be forced to look to two our neighbors now – New Jersey and Massachusetts – to find the property tax relief they deserve here.”

GOP lawmakers in the Senate are not pleased that the STAR program—designed to provide property-tax relief for homeowners in the form of a rebate check—has been cut in the state Legislature’s budget.

The exemptions would end for those with homes valued at more than $2 million. Gov. David Paterson supported a 4 percent cap on property taxes each year. The cap, supported by suburban and upstate lawmakers, was not in the final version of the budget.

Republicans blasted the budget for its spending proposals and cuts to STAR.

By increasing spending with no way to pay for it, Democrats have created an unbalanced budget that includes no relief for property taxpayers and continues to cut the STAR property tax relief program by millions of dollars.

This budget does nothing to create jobs. In fact, Democrats voted to eliminate half a billion dollars in job creation tax credits that will jeopardize thousands of jobs, especially upstate.

After raising taxes by more than $10 billion last year, Democrats are adding billions more in tax and fee hikes this year. This disastrous budget will hurt every business, every family and every taxpayer in this state.

The budget taxes too much and spends too much. How much? Even the Democrat Chairman of the Senate Finance Committee, Carl Kruger, had no idea about the exact size of the budget when it was voted on. Despite this, every Democrat voted for the budget and every taxpayer should be as outraged as we are.

After a tortured budget process where they violated the budget reform law, negotiated in total secrecy, excluded Republicans from the process and rejected every alternative we offered to reduce spending, Senator Sampson and Speaker Silver took matters into their own hands and created an irresponsible, unbalanced budget that Senate Republicans unanimously opposed.

They should not expect or count on Senate Republicans to bail them out of the mess that they have made of this budget and the damage they are inflicting on taxpayers.

A tax on sugary drinks is a little like broccoli: You might not like it, but it’s good for you.

That was the message from the New York City Department of Health, which released a study this morning that found an excise tax on soda and other sweet drinks would prevent at least 145,000 new cases of obesity.

“Drinking beverages loaded with sugars increases the risk of obesity and associated problems such as diabetes, heart disease, stroke, arthritis and cancer,” said Dr. Thomas Farley, New York City Health Commissioner in a statement. “In New York City alone, diabetes causes 20,000 hospitalizations, 3,000 amputations and 4,700 deaths every year. We know that sugared beverages are fueling this epidemic – they’re the leading source of sugar and excess calories in the American diet – and we know that even a modest increase in cost can help temper consumption.”

A penny-per-ounce tax on sugary drinks is estimated to bring about $900 million in new revenue for the cash-strapped state.

In a radio interview this morning, Gov. David Paterson didn’t rule out the tax, which he’s been seeking for two years. He also echoed some of what the report found.

The governor said it made “perfect sense” to have the tax because it would raise revenue and reduce health-care costs.

“It’s in the discussion, but they haven’t approved it,” he said of the Legislature.

There’s word around Albany that the $110 exemption on the clothing sales tax could be changed to a series of tax-free holidays held at different times of the year.

Here’s the report:
Health Study

The leader of the Seneca Nation issued a strong condemnation of the plan to collect taxes from cigarettes sold to non-American Indians on reservations.

“We are not a piggy bank the state can break open to grab extra cash. We are a sovereign nation protected by federal treaties and we will defend those treaties by whatever means necessary,” said Barry Snyder, president of the Seneca Nation in a statement sent Monday evening.

The impact of the tax on reservations and employment will be extreme, he said.

“Thousands of Senecas and non-Senecas will lose their jobs,” he said. “Hundreds of millions of dollars in spending will cease. This is a quick fix no New Yorker can afford.”

He was reacting to the passage of a plan to collect taxes from cigarettes sold on reservations, a long-sought source of revenue for New York state. Gov. David Paterson believes the state will be able to collect $150 million from the plan. The bill was linked to an increase in per-pack tax on cigarettes and other tobacco products.

Under the legislation passed by lawmakers Monday, reservation residents can enter into a coupon program to continue to purchase tax-free cigarettes. Or, they can join a prior approval program that would require the wholesale dealer to ship a fixed number of cigarettes to a reservation.

Sen. Jeff Klein, D-Bronx, said the plan is fair.

“We’re a nation of laws and we’re a state of laws,” Klein said. “The law is on our side.”

Klein, a smoker himself, has sought legislation to crack down on the sale of cigarettes over the Internet and reduce tax-free cigarettes being sold on the street.

“When you look at any constitutional argument or any law I’ve seen, when non-Native Amercians buy cigarettes, they have to pay the tax,” Klein said. “They point to all types of treaties, all the types of treaties I’ve seen deal with real property. They don’t deal with the taxation of goods like cigarettes.”

Klein said he would like to quit smoking, but has no immediate plans.

“Not until after this budget is done,” he said.

Treasury Secretary-designate Timothy Geithner is telling the Senate Finance Committee that President Barack Obama wants to consider entitlement reform and reform of the nation’s corporate tax system.

Geithner noted that the Congressional Budget Office estimates the federal deficit will be in the range of $1.2 trillion and that the new administration does not expect an economic recovery alone will make it manageable.

New York Rep. Charles Rangel, chairman of the tax-policy writing Ways and Means Committee, released this morning the tax provisions expected to be included in the economic stimulus package working its way through Congress.

Democratic congressional leaders hope to send the $850 billion bill to the White House by mid-February.

The House version of the bill does not include a one-year fix for the Alternative Minimum Tax.

Here’s an outline of the provisions released by Rangel’s committee:

Tax Relief for Individuals:

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  “Making Work Pay Credit”
  
  
  
  
  
  
  Expand Earned Income Tax Credit (EITC)
  
  
  
  
  
  
  Increase in child tax credit, $0 floor
  
  
  
  
  
  
  
  
  Simplification of education credits w/ $2,500 credit for first four years of higher education expenses (increase income limitations), with credit partially-refundable (40% refundable)
  
  
  
  
  
  
  
  
  Remove repayment requirement on $7,500 first-time home buyer credit for homes purchased after 2008 and before termination of credit (June 30, 2009)
  
  
  
  
  
  
  Coordination provisions with new grant program for low-income housing being designed by the Financial Services Committee
  
  
  
  
  
  
  
  
  Bonus depreciation
  
  
  
  
  
  
  5-year carry-back of net operating losses (excluding companies receiving TARP benefits, Fannie Mae, Freddie Mac)
  
  
  
  
  
  
  Extension of increased small business expensing
  
  
  
  
  
  
  Expand work opportunity tax credit for disconnected youth and unemployed, recently-discharged veterans
  
  
  
  
  
  
  Prospectively repeal Treasury Section 382 ruling
  
  
  
  
  
  
  
  
  Allow financial institutions to purchase State and local bonds and other changes
  
  
  
  
  
  
  Repeal AMT limits on new private activity bonds
  
  
  
  
  
  
  Taxable bond option for governmental bonds
  
  
  
  
  
  
  School construction bonds
  
  
  
  
  
  
  One year deferral of withholding tax on government contractors
  
  
  
  
  
  
  
  
  Provide tax exempt bonds and tax credit bonds to “recovery zones.”  These tax exempt bonds and tax credit bonds can be used for a wide array of purposes to stimulate economic development, including job training and education.  A “recovery zone” would be an area within a State, city or county that has exhibited high unemployment, foreclosures or poverty.  These bonds would be allocated automatically to States and large municipal governments based on the number of unemployed individuals within that area.
  
  
  
  
  
  
  
  
  Long-term extension of renewable energy production tax credit
  
  
  
  
  
  
  Temporary election to claim the investment tax credit in lieu of the production tax credit
  
  
  
  
  
  
  Coordination provisions with new grant program for renewable energy projects being designed by the Energy and Commerce Committee (sections 45 and 48 projects)
  
  
  
  
  
  
  Clean Renewable Energy Bonds (“CREBs”)
  
  
  
  
  
  
  Qualified Energy Conservation Bonds
  
  
  
  
  
  
  Energy efficiency and conservation tax incentives under sections 25C, 25D and 48
  
  
  
  
  
  
  Smart energy conservation, energy efficiency, and renewable energy R&D credit
  
  
  
  
  
  
  Refueling property credit expansions
  
  
  
  



Education




Housing




Business




State and Local Governments




Distressed Areas




Energy Tax Incentives

Trade Adjustment Assistance (TAA)

· Updates, modernizes and expands TAA  to cover service workers, and substantially improves and extends coverage to manufacturing workers

· Triples funds for job training

Unemployment Insurance (UI)

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  Encourage UI Modernization
  
  
  
  
  
  
  Continue the Emergency Unemployment Compensation Program
  
  
  
  
  
  
  Increase UI checks by $25/week
  
  
  
  
  
  
  
  
  Provide additional TANF Contingency Funds to serve needy families
  
  
  
  



Additional Temporary Assistance for Needy Families (TANF)

Supplemental Security Income (SSI)

· Provide a one-time additional SSI Payment to Low-Income elderly and disabled recipients

Child Support Enforcement Funding

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  Restore federal funding for Child Support Enforcement for 2 years
  
  
  
  
  
  
  
  
  Provides temporary subsidies for health insurance coverage to those who have lost their jobs.
  
  
  
  
  
  
  Extends the availability of unsubsidized COBRA coverage for older and tenured workers beyond the 18 months provided under current law
  
  
  
  



COBRA Health care for the Unemployed

Health Information Technology (HIT)

· Establishes standards, payment incentives and privacy protections to encourage the widespread adoption of health information technology.

Extends Moratorium on Selected Medicare Regulations through October 1, 2009