State tax deal provides political cover

Suddenly, the fiscal cards on the table have been shuffled.

By striking a wide-ranging deal before the budget season, Gov. Andrew M. Cuomo and the State Legislature Tuesday scrambled out of a political stalemate over taxes in something-for-everyone fashion.

The agreement appears to blend a bit of this year's Occupy Wall Street sensibilities into previous years' tea party consciousness, giving the players political cover in key ways.

For example, some called Cuomo "Gov. One Percent" for his refusal to support extending a surcharge on wealthier taxpayers.

Now, he can point you to the comprehensive deal's $1 billion for a jobs program, middle-class income-tax rate reductions, and retention of a higher 8.82 percent rate for those making more than $2 million a year.

Or, did you feel Sen. Dean Skelos (R-Rockville Centre) and his Republican majority were giving in to "tax-and-spend" habits by allowing an estimated $1.9 billion in higher annual revenue?

Well, the GOP conference can now claim success in reducing the dreaded MTA payroll tax, by at least $250 million, in the indexing of tax brackets to inflation, and in advocating breaks for manufacturers.

For those bent on seeing where the austerity is, Cuomo's office says the deal will still require new spending cuts worth $2 billion next year.

Some Democrats were perturbed that the Democratic-controlled Assembly was allowing cuts to drive the agenda. With this deal, Speaker Sheldon Silver (D-Manhattan) gets to hail "a more progressive tax structure" that will help bolster revenue.

Overall, it marks a timely compromise that Albany's elected leaders -- never too shy to boast -- will compare favorably against the famous Washington, D.C., model of partisan gridlock.

The so-called millionaire's tax battle, with Silver wanting to keep a 2009 surcharge and Skelos and Cuomo favoring letting it expire as scheduled, thus finds a resolution.

The surcharge actually applies to incomes over $200,000 for individual taxpayers and over $300,000 for couples filing jointly. On Jan. 1, the top tax rate for those filers was therefore poised to fall from the current 8.97 percent to 6.85 percent, the same rate as those of lower income levels.

This new legislative deal scales tax rates upward, from 6.45 percent at $40,000 in income to 8.82 percent at the very top.

Some critics, pre-emptively attacking the deal, are harking back to Cuomo having said not two months ago: "You are kidding yourself if you think you can be one of the highest-taxed states in the nation, have a reputation for being anti-business -- and have a rosy economic future."

But as these things go, Tuesday's deal has a more sophisticated design than what New York City did a decade ago while facing a severe budget deficit and the perception that further cuts would prove damaging.

Taking office in 2002, Mayor Michael Bloomberg said before the election "you cannot raise taxes. . . . If you raise taxes, you will drive enough business and people out of this city, [so] your total tax revenues over a period of time would probably decline rather than go up."

Less than a year later, he reached a deal with the City Council to hike property taxes a record 18 percent. His poll ratings temporarily plummeted.

No two fiscal crises, or elected executives, are exactly alike. In recent months, the governor's popularity ratings remained high even as polls showed a millionaire's tax that he seemed to resist also would draw wide approval. The karma of Cuomo's first season has yet to fade.