THE WALL STREET JOURNAL October 10, 2014
Astorino’s tax reform would lift the state’s flagging economy.
Democrats are frustrated that voters aren’t giving them credit for the economy, but maybe that’s because growth has been so slow in so much of the country. Take the Northeast, where GDP grew a meager 0.7% in New York in 2013, which almost makes Connecticut’s 0.9% and New Jersey’s 1.1% look good. So three cheers for GOP candidate for Governor Rob Astorino, who is promoting a tax reform to lift New York from the doldrums.
The executive for Westchester County, north of New York City, is calling for a simpler system that cuts the top state tax rate on personal income to 6% from 8.882%. Eight different tax brackets would be reduced to two, with the 6% rate applying to income above $200,000 for individuals and $300,000 for married couples. A 4% rate would apply to income below those levels.
The Republican would also repeal a utility tax, and by 2020 he’d phase out New York’s dreaded estate tax, which runs up to 16% and has sent tens of thousands of New York residents to retire in better tax climates. Mr. Astorino also wants to cut the state corporate tax rate to 5.9% from 6.5% by 2019. A simplified corporate system would eliminate favors for politically popular industries like the film tax credit that subsidizes the millionaires who produce “Saturday Night Live” and “The Tonight Show.”
Democrats will gripe that this helps the rich, but New York needs a big-bang reform after decades of decline. Only New York City is dynamic, with the rest of the state lagging, except for a few growth areas like agriculture and health care. Governor Andrew Cuomo has bowed to rich urban greens by barring the natural-gas shale drilling that has so helped upstate Pennsylvania.
Mr. Astorino says his goal is to make the Empire State competitive with the likes of Florida, which likely surpassed New York in population this year. Florida has no income tax and grew its economy more than three times as fast as New York’s last year. For that matter 44 other states also grew faster than New York. The exceptions were Pennsylvania, Virginia, Maryland and Alaska, according to the Bureau of Economic Analysis.
We’d argue that Mr. Astorino has already had a positive impact on state tax policy. Concerned about his looming re-election challenge, Mr. Cuomo this year signed a cut in the corporate tax rate to 6.5% from 7.1%. He’s also promoted a 10-year tax holiday for businesses willing to jump through various bureaucratic hoops.
But New York still has far to go. The Tax Foundation noted that this year’s tax cut would have moved New York’s place on the foundation’s annual business tax climate index from dead last among the 50 states to 48th. Whoopee.
The polls aren’t giving Mr. Astorino much chance against Mr. Cuomo, in part because the Republican lacks the money to get his name and plan before the voters in a very expensive media market. He deserves a better hearing, and the state deserves the jump-start to growth that his tax plan would provide.