A plan by Governor David Paterson (D-NY) to raise an additional $4 billion through nearly 100 increased taxes and fees to close his state’s budget gap for fiscal year 2010 (which may be as large as $15 billion) contains proposals that move the Empire State closer to, and further away from, sound tax policy, as well as proposals that might be good or bad depending on surrounding circumstances. In Tax Foundation Fiscal Fact No. 159, “New York Governor David Paterson’s Tax and Fee Proposals a Mixed Bag,” Tax Foundation Staff Economist Josh Barro notes that many of the improvements in the Governor’s plan involve broadening the sales tax base. This includes elimination of the sales tax exemption for clothing, expansion of the sales tax to various services, and the elimination of the tax cap on gasoline. Many of the bad proposals also have to do with sales, including a new sales tax holiday on clothing that would make the tax code more complicated and would not foster more economic activity. Paterson also includes an 18% tax on soft drinks containing sugar, a so-called “obesity tax.” Read “New York Governor David Paterson’s Tax and Fee Proposals a Mixed Bag.” More on New York’s tax system.
