Sunday, May 16, 2010

Mayor Bloomberg Under Fire for his 'Trickle-down Theory': Spend Money to Make Money by Adam Lisberg - NY Daily News

I just wonder if being the richest person in New York City and his own tax savings influences his decision not to tax the rich more...Doh..!

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Mayor Bloomberg has a trickle-down theory of New York's economy: Spend money to make money, and make sure the people at the top have money to spend.

He believes in generating jobs through big projects like rebuilding Coney Island and Willets Point - subsidizing them with tax breaks and public money if necessary.

At the same time, he protects rich New Yorkers from any more tax hikes, saying their big spending creates jobs for everyone else.

Just 18,000 New Yorkers pay half the city's income taxes, Bloomberg said last week, while half of New Yorkers pay no income taxes at all.

"If you hurt, for example, our financial services industry, it's the people at the bottom ... that are going to get laid off," Bloomberg said.

Now he's being challenged on several fronts. The opposition comes from different sides of the spectrum - and isn't always consistent - but agrees that just because Bloomberg dominates the budget process doesn't mean he's right.

Call it the trickle-up theory.

"If nobody can show that trickle-down theory works," said Controller John Liu, "we should get rid of it."

The conservative Citizens Budget Commission slammed Bloomberg's $2 billion third-term economic development plan, saying there's no evidence it generates new business.

The liberal Fiscal Policy Institute slammed Bloomberg's reliance on Wall Street, saying he should focus on bringing up the subpoverty-level wages of the poorest working New Yorkers.

"Relying on better wages for every New Yorker makes a lot more sense as an economic recovery strategy than waiting for Wall Street bonuses to trickle down," wrote FPI economist James Parrott.

The tension was on display last week at a hearing on a bill to require a prevailing wage for workers at buildings with city-funded tenants.

The Bloomberg administration said it would force rents up, but it has strong Council support. (It helps that the bill is backed by building workers union 32BJ, which backs the Working Families Party, which helped some Council members get elected.)

Less likely is a tax on Wall Street bonuses, pushed by the Council's WFP-backed Progressive Caucus, which contends it won't drive rich New Yorkers to leave. They don't have the votes to pass it, but they want to steer the conversation their way.

Councilman Brad Lander (D-Brooklyn) said Bloomberg doesn't seem to worry about why so few New Yorkers are at the top of the tax bracket and so many are at the bottom.

If Bloomberg really wants to grow jobs, Lander said, he would reverse one of his proposed budget cuts: Saving $4 million by eliminating 737 low-wage Parks Department training jobs for people on welfare just entering the workforce.

"It seems to me that's one of the areas where you'd want to expand instead of cutting back," Lander said. "I'd rather see us use more of our economic development resources in projects that more directly create jobs."