Taxing our way to prosperity... again

Last year we discussed the story of how Georgia Governor Nathan Deal wound up having a conversation with Grover Norquist on the subject of taxes. (Who could have guessed that one?) Norquist warned Deal about the dangers of trying to balance the budget by way of jacking up excise taxes on things like tobacco, alcohol or sweetened drinks. The Georgian listened and the plan was tabled.

In case they’re thinking about revisiting that “solution” in the future, they may want to check in with the Big Apple and see how well things worked out for Mayor Bloomberg and Governor Cuomo. These economic masterminds apparently became concerned over the holidays with the condition of the state and city’s coffers. A new law had been passed which forbid cigarette distributors from selling untaxed packs to Native American reservations. This, in theory, was supposed to force residents back to the normal convenience stores to pay the record breaking tax levels for smokes there, resulting in an extra $130M in tax revenue for 2011. So… how did that work out?

The state’s tax collectors were recently calling around to convenience-store owners, wondering what was up. The $130 million in extra tax that Albany was expecting from a change in the law about cigarette sales on Indian reservations wasn’t happening.

A memo sent to members of the New York Association of Convenience Stores from the group’s president, Jim Calvin — a copy of which I have on my desk — said, “I got a call from Gov. Cuomo’s budget office yesterday. In examining cigarette tax receipts so far this fiscal year (April 1 to March 31) it looks like they will fall considerably short of their projection in new revenues. . . .”

So how much extra did the state collect in tax with the law change?

The state Department of Taxation did not return a call for comment.

But according to Calvin’s memo, “Cuomo’s budget office” was saying that cigarette tax revenues were flat this past October and November with the year before.

That seems to mean that Albany is $130 million short on its $130 million projection.

That’s right. They went through all manner of legal wrangling, sparking constitutional challenges, ruined relations with the tribes and continued our push to displace Massachusetts as the worst taxed place to live in the nation and got.. a big goose egg. Meanwhile people continue to leave the state. Some leave for day trips, preferring to do their shopping in Pennsylvania. Others leave permanently, which is precisely why New York lost two congressional seats after the last census and is still haggling over the redistricting process.

But fear not! We’ve got a new plan. This time we’ll try a millionaire’s tax. That should fix everything!