In this second part of the halftime report for Tax Foundation Forum: Making Sense of Profit Shifting, we discuss the key takeaways from the first half of our series on profit shifting (read part I here). In this post, we...
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- Mike Bloomberg Learns That His Title Is Mayor, not Tax Tsar
Mike Bloomberg Learns That His Title Is Mayor, not Tax Tsar
My recent Fiscal Fact on New York City's budget shortfall erroneously claimed that the Mayor had the authority to cancel a scheduled $400 property tax rebate without any legislative approval. In fact, the cancellation would require approval from the City Council, which does not appear likely to grant its assent. I regret the error.
My source from this error was a document issued by, er, the office of New York Mayor Michael Bloomberg. His office announced the rebate's cancellation two weeks ago as a fait accompli, but has now had to put its tail between its legs and admit the Mayor lacks the authority to cancel the rebate on his own. The New York Times reports:
It turns out the mayor does not have the power to halt the rebates, the city’s top budget official grudgingly admitted on Monday, under questioning from the City Council...
At one point during the hearing, City Councilman David I. Weprin, chairman of the Finance Committee, waved a document in the air and, invoking Perry Mason, declared he had a “smoking gun”: a city bond prospectus including legally binding language that stated that rescinding the $400 property tax rebate “requires city legislative approval.”
Mr. Weprin told [Bloomberg budget director Mark] Page that either the administration or the document was wrong.
“I’m not addressing,” Mr. Page began, before burying his face in his hands, and mumbling, “Oh, forget it. Fine.”
After the hearing, Mr. Weprin told reporters that “there’s overwhelming opposition to the revocation” on the Council and that “it’s pretty much dead on arrival.” He also predicted that the checks would go out soon.
This appears to be the same hearing where Councilman Louis Fidler made the dubious claim that "people who are living hand to mouth are expecting that check." Approximately two-thirds of New York City households rent their homes, and therefore are ineligible for property tax rebates; the one-third that are owners skew relatively wealthy. Nonetheless, $400 checks are popular with voters, and the council, consisting as it does of elected officials, is highly unlikely to cancel the rebate.
Continuing the embarrassment, the mayor's office also admitted that its proposed bag "fee" is really a tax. I described the proposal last week:
A new five-cent-per-bag "fee" on disposable plastic shopping bags... The Bloomberg administration maintains this proposal isn't a tax, despite the fact that the proceeds do not defray costs for the government to provide a specific service but rather provide general revenue. Most authorities would call it a tax, and the distinction matters, because the city council can approve a new fee, whereas a tax would require assent from the state legislature. Other cities that have considered such proposals (including Seattle) have properly labeled them as taxes.
Indeed, the New York Times reported yesterday (same article as above):
The Bloomberg administration had hoped to bypass the Legislature by calling the charge a fee, rather than a tax, but Mr. Page, after researching the issue, said that it would legally be considered a tax, and Albany’s approval — never a sure thing for Mr. Bloomberg — would be required.
I can only assume Mr. Page read my report. While the bag tax proposal was a bit silly (it would raise a trivial amount of revenue, and makes no argument that five cents is the right price to offset any environmental externalities from plastic bag use) some of Bloomberg's better proposals—like expanding the sales tax to clothing, tolling the four East River bridges that are currently free, and cutting the city's budget—are still alive, for now.
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