In its look-back today on Governor Andrew Cuomo’s second legislative session, The New York Times quotes the governor as saying he had “front-loaded” the legislative calendar. The article (subscription required) includes this line:
Last December, he [Cuomo] mitigated much of the projected state deficit by restructuring New York’s tax code, lowering taxes for the middle class while creating a new high-tax bracket for the state’s top earners.
As commonly defined, the word “restructuring,” implies a basic change to the organization, makeup or pattern of something — in this case, the state personal income tax. Today’s Times story links to the same paper’s original account of the tax changes as an “overhaul” — which, in the dictionary definition, means a thorough revision or renewal. However, both descriptions are misleading. What the governor and the Legislature did to the tax code last December was tinker, not restructure. The change was not thorough; indeed, it was not even permanent.
The December tax bill temporarily reduced the marginal rate on middle-class earners by a small amount (3 to 6 percent), generating an even smaller net percentage tax savings for most affected households, while temporarily extending a tax bracket that increases total income taxes on high-income earners by a larger amount (29 percent). The tax rates and standard deduction were linked to inflation for the first time, but this was also temporary. All the changes are due to expire at the end of 2014. Temporary rate changes aside, the basic structure of the New York State income tax — a unique hybrid of graduated and flat tax, plus deductions, exemptions and credits — was left unchanged.
During the first 11 months in office last year, Cuomo repeatedly had pledged not to extend the temporary tax increase enacted under Governor Paterson in 2009. But after a drop in projected revenues became apparent in late October, which added $1.5 billion to the projected budget gap for fiscal 2012-13, he changed his position. Rather than simply concede that he preferred to raise new revenue rather than cut more spending from the budget, the governor promoted a new narrative designed to justify his move as a sweeping “tax reform” or “overhaul” that allegedly would restore “fairness” to the tax code. The real story is recounted here and here.
The tax hike was a political win for the governor, taking a big potential complication off the table before the start of this year’s budgeting cycle. But by continuing to describe the changes using terms like “restructure,” the Times and other media outlets perpetuate the governor’s self-serving and misleading spin.