The news out of New York in recent weeks hasn't been especially encouraging for those concerned about the impact of the recent economic downturn on vulnerable lower-income families. Unfortunately, that trend seems to be continuing, as New York Governor David Patterson proposed a budget this week devoid of the type of progressive tax increases the state needs to responsibly make it through the current recession. This is despite the fact that just days earlier, over 100 economists joined the New York-based Fiscal Policy Institute in calling for tax hikes on high-income earners as a way to avoid painful cuts in the state services lower- and middle-income families rely upon. All told, the Governor's budget relies about twice as heavily on spending cuts as it does on tax and fee increases.

On the revenues side of the budget, the proposal lacks broad-based increases and instead takes a more piece-meal approach. While this is far less than ideal, it is worth noting that some of those piece-meal items are certainly worthy of being included in the final budget deal. An expansion of the sales tax to include more services, limitations on the deductions claimed by wealthy families, and a scaling back of some of the state's "broken" tax breaks for businesses are among the revenue raisers included. The Governor's budget also includes a new "luxury tax" on items such as yachts, jewelry, and furs. While such a tax would most likely be progressive, it's hard to see what advantages it brings over simply enhancing the progressivity of the state's income tax.

To enjoy an interesting and heated sub-plot, check out this New York Times piece on the tax on "unhealthy" beverages that the Governor has included in his budget plan. Despite insistence that the idea is motivated by concern over the public health ramifications of these drinks, it's hard to take seriously such claims when New York is facing a budget deficit. More meaningful, broad-based tax reform would be a preferable route to addressing the budgetary issues.

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