Thursday, March 29, 2007

Re: Supply Side and Giuliani   [John Podhoretz]

Ramesh, you use the New York Sun editorial to point out Giuliani wasn't always a supporter of tax cuts by mentioning his staunch opposition to a commuter-tax cut in New York State. The issue was a little more complicated than that, and even the City Journal, the fine quarterly published by the Manhattan Institute, wasn't angry at Giuliani for opposing the repeal of the commuter tax.

The commuter tax ended up being lifted in 1998 as a result of a kabuki dance in Albany — a tussle over two State Senate seats. It's way too complicated to go into now, but the Republican politician who proposed the repeal — a RINO named Joe Bruno who runs the State Senate — only did so because he was trying to help Republican candidates in two counties near New York City.

Bruno never thought the repeal would go through. He expected a powerful Democratic politician (Sheldon Silver, who runs the State Assembly) to snuff out the repeal. But Silver decided he wasn't going to be thrown into that briar patch and get tagged as the killer of a tax cut, so he let the repeal go through.

The result was an instant $200 million hole in the New York City budget. In effect, Albany was challenging Giuliani to raise taxes in New York City — on his own constituents — to make up for the shortfall it had caused to curry favor with voters in Rockland and Dutchess Counties. Giuliani reacted as any politician would react in such a situation. He got really mad, and did what little was in his power to do — which is to say, almost nothing — to get Albany to change its mind.

Now, you can argue that commuter taxes are always unfair. Fine. In the case of New York City, that is a questionable proposition at best. The city government actually provides a huge portfolio of services for a great many people who work there but do not pay taxes there — such as water, steam heat, sanitation, policing, firefighting, emergency medical treatment and so on.

In short, the Giuliani opposition to the commuter-tax repeal tells you nothing about his view of taxation generally. As mayor, he did what he could to cut some of the most onerous taxes in the nation that had been imposed specifically by the City Council and previous mayors. His City Council wasn't all that high on doing a lot of it, but he muscled some of it through and that was more than anyone who preceded him had done.

03/29 11:11 AMShare