More Dumb Economics in New York

New York has gained national political attention in recent weeks for all kinds of shenanigans perpetrated by its previous and current governor. This might cause people to forget the economic shenanigans perpetrated by politicians on residents and businesses in the Empire State.

New York elected officials are racing to pass a state budget on time. What tops the agenda? Well, naturally, it’s all about more government spending and higher taxes with little regard for the state’s economy, consumers and businesses.

Here’s how a March 31 report in the New York Sun sums up matters:

The budget appears to stand at $124 billion, about $200 million less than what Mr. Spitzer proposed in January. The tentative deal calls for raising spending $500 million beyond what Mr. Paterson advised this month, a total funds increase of 4.8% over last year's spending levels. The increase comes amid warnings of a recession and expectations that state revenue will shrink further, threatening to create midyear deficits. To help close what is already a $5 billion budget gap, lawmakers are set to approve an increase of the state cigarette tax to $3 a pack, bringing the total tax in New York City to $4.50, the highest in the nation. They are also expected to change the tax code so that Amazon.com and other online retailers are required to charge state and local sales taxes on all purchases from New York.

The higher cigarette taxes will further incentivize underground, criminal activity, and raise costs and decrease business for small, retail firms. Meanwhile, the online tax faces obvious constitutional issues, and sends a clear signal that New York is hostile to the cutting-edge, high-tech, Internet economy.

It’s the same old economic shenanigans in high-tax, anti-business New York.