Voting - Last-minute donors are buying "stock at 52-week high"

De Blasio and Early Supporters, Brooklyn. Photo by JT Marlin.

Crains Insider has an inform-ative story by Andrew Hawkins about real estate developers resignedly writing checks, for the max allowable, to mayoral candidate Bill de Blasio -- even though it is late, one week before the election and de Blasio is a shoo-in with a 45-percentage-point spread between him and Joe Lhota.

What impressed me most about the article was a campaign contributor's acknowledging that late giving to a candidate was not buying much, that it was like "buying a stock at its 52-week high", as opposed to important early volunteering and money that paid for de Blasio's advertising campaign. The EMILY in "Emily's List" stands for "Early Money Is Like Yeast."

Both labor unions and real estate contributors mostly put their early bets on Christine Quinn or Bill Thompson. Polls as of February showed Quinn ahead three to one, with de Blasio just one percentage point behind Thompson, and I noted that de Blasio had the advantage of incumbency. But then Anthony Weiner shot into first place, showing that enthusiasm for front-runners Quinn and Thompson was weak. So when Weiner's campaign faded, de Blasio's ad featuring Dante Blasio and his Afro provided the boost for de Blasio to take Weiner's place in the lead. After de Blasio won the Democratic primary outright, it became clear that Joe Lhota was battling against a huge spread in the polls. Lhota's attack ad on crime got nothing for him, as de Blasio added five percentage points to his lead. So the campaign cash is now flooding in to de Blasio's campaign.

The final debate between de Blasio and Lhota is on Wednesday evening (sandwiched between the anniversary of Sandy on Tuesday and Halloween on Thursday) from 7 to 8 pm on NBC-TV.

NYC | Paid Sick Leave

NYC Gets Paid Sick Leave

For three years Speaker Christine Quinn held the line in the NY City Council on paid sick leave, citing the ailing NYC economy.

All of her mayoral opponents piled on against her at a meeting she was unable to attend.

Then she pushed through legislation quickly and efficiently.

That is pretty impressive.

The compromise that was reached will give paid sick leave to one million New York City service workers that didn't have it.

For those who think she gave away too much, I say - five days a year, only for companies employing at least 20 people (15 people starting in 2015)? That is not too much. Larger companies and governments routinely allow a day a month for the first year and 15 paid sick days after the first year.

For those who think workers deserve better - of course they do. But New Jersey has zero sick days required of anyone and Connecticut requires nothing of any company hiring fewer than 50 people. The principle that is preoccupying the Supreme Court on DOMA - not being too far ahead of public opinion - also applies to political leadership.

The activists should move their campaigns to neighboring states - if they can move the needle in NJ and CT, come back to NYC!  Here is the NY Times story today
http://nyti.ms/10nfo83.

SICK LEAVE | NYC Debate

Share of workers included in NYC Paid Sick Leave proposal,
based on the size (by number of employees) of reporting
establishments excluded from the law. If only companies with
fewer than 5 employees are excluded, 92 percent of all employees
will be covered. CityEconomist chart based on BLS data. 

The New York Times this morning has a story by Vivian Yee on the issue of paid sick leave.

On Sunday morning, March 24, at 8 am, MSNBC host Chris Hayes is hosting a round table with several Democratic mayoral candidates.

He says the norovirus has been spread in NYC by food workers, because 80 percent don't have paid sick leave days (see Politicker at http://bit.ly/16PAZLm.)

Speaker Chris Quinn has a scheduling conflict and can't make the event. But her office has done some good research on paid sick leave issues. The research should be in front of the discussion even if she can't make it. For example, a simulation shows that there is a big drop-off – from 9 percent to 2 percent – in the risk of multiple absences (5 percent of employees or more) with 20 or more employees, assuming five days' sick leave per year.

This suggests that the legitimate concerns of small businesses can be addressed by exempting firms with fewer than 20 employees. That would cover 72.7 percent of all NYC employees, based on NY state data on size of establishments, 2011 data. In Connecticut, the cutoff is 50 employees, but this seems unnecessarily high, since it would exclude 56.8 percent of employees assuming the same size distribution of companies.

In New Jersey, the percentage of workers covered falls only from 83 percent to 80 percent by reducing coverage from establishments of fewer than 10 employees to firms of fewer than 20 employees, so it has many fewer establishments in the 10-19 employee range than New York State..

NY LAW SCHOOL | Quinn Is a Pro

Speaker Christine Quinn at NY Law School,
Friday, Feb. 15.

A recent NY1-Marist poll shows New York City Council Speaker Christine Quinn as the three-to-one favorite to be the next mayor of New York City. Her speech this morning at the New York Law School Forum (see photo above) was consistent with the polling.

Being a front-runner is a hazardous position, and Speaker Quinn's job today was to hold her place. She did that.

She was elected to the City Council in 1999 from my neighborhood, Chelsea, so she has a favorite-daughter position around here. She has been Speaker since 2006. She is ahead, by a convincing 37% to 13%, over former NYC Comptroller Bill Thompson, whose base has been Brooklyn but now lives in Manhattan. Some of my good friends are backing Mr. Thompson and are counting on a runoff between him and Quinn that he might win. Thompson did surprisingly well in the last election against Mayor Bloomberg, but analysts interpret this as more of a vote against a third term for the Mayor than as deep support for Mr. Thompson. Also, Public Advocate Bill de Blasio is only one percentage point (12%) behind Thompson in the poll and de Blasio has the advantage of incumbency.

On the Republican side, Joe Lhota, who worked for Mayor Rudy Giuliani and has more recently been running the MTA, is the favorite. In a lopsidedly Democratic city, it's a long shot for him - the poll shows him losing to Quinn 64% to 18%. More worrisome for him is that only 20% of respondents supported him - most respondents didn't know enough about the GOP candidates to make any choice at all. He can count on getting enough campaign finance support to run a significant challenge. But money is not usually enough to win in New York City as many wealthy also-rans will testify. Mayor Bloomberg got his foot in the door because of 9/11, after which people were properly concerned about the future of New York City as a business engine, and Bloomberg's business acumen was a convincing asset.

There is still talk of other people entering the race this year, but it's nearly March and doors are closing. So those who are concerned about LAM - Life After Mike - assembled at the breakfast forum to build up their dossiers on Ms. Quinn, who would be the first female mayor of New York City and the first openly gay mayor. The event attracted more than 250 people by my count. A streaming-video recording of the event is here.

Ross Sandler, NY Law School host.

Ross Sandler is the host (see photo at left). His breakfast event is the closest thing to a successor to the City Club of New York, which played a significant role in the City of New York for more than 100 years, including in the fiscal crisis and then the mayoralty of the late Ed Koch. A moment of respectful silence for the loss of a great Mayor... and another moment for the demise of the City Club.

The New York Law School's location near the NYC courts makes it convenient for students who may want to get a law degree at night. Its location make is easy to find faculty to teach part-time. My connection with the NY Law School is that my great-aunt Inez Milholland's brother got his law degree after a career as a Harvard football kicker (he was class of 1912), which in those days got the columns of newspaper ink now lavished on the pro teams. Inez Milholland, by the way, was the woman who led on her horse the march down Pennsylvania Avenue on the eve of President Wilson's inauguration - a march that set the stage for passage of the 19th Amendment giving women the vote. (The NY Times on March 4 led off with paragraphs about Miss Milholland.) The 100th anniversary of this march is in two weeks.

Questioners in two lines.
Revered City Club tradition (sniff).

Chris Quinn was a pro, took questions with a combination of respect and firmness, and lightening up the atmosphere with believable stories about her Irish grandfather and her mother's fear of a hex:

If you take down the Christmas tree before Three Kings Day, it will be a curse on you for the rest of the year. 

She listened to tough questions from Charlie Komanoff, Roger Herz and Azi Paybarah about congestion pricing and Commissioner Kelly (whom she would like to stay on) and stop-and-frisk laws. She expresses sympathy with a problem like sound cannons and either gives an "I will look into it" or (in the case of congestion pricing) a "no chance that will  happen soon" answer. She supported the mayor in his bid for congestion pricing, but makes clear that the outer-borough opposition is  strong and this plan is on ice in 2013. In a political environment where a candidate walks a narrow path between cannons to the left and cavalry to the right, with minefields in the middle, she got to the other side with a sure step and no mishap. She did mention Verizon as failing to keep all its mobile phone subscribers in communication during Hurricane Sandy and then Prof. Sandler sheepishly noted that Verizon was a co-sponsor of the breakfast; when informed of this she sort of said she was sorry and breezed on.

To my mind, the test of the day was whether we would have a Marco Rubio water-bottle problem. No way.   She is on top of her game.

It's still "early times" for the 2013 Democratic Primary on September 10. Good politicians focus earnestly on the next election, not so much the one(s) that may occur soon after - because, as the late Howard Samuels once discovered, there is no point in worrying about the later election if you lose the earlier one. Based on her performance today, I would say that Speaker Quinn will continue to lead the pack come September 10.

NYC TAXES | Plucking the Golden Geese

March 10, 2009–French Finance Minister Jean-Baptiste Colbert, the second after Fouquet to serve under Louis XIV, said that the art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.

The golden geese in New York City are the top 1 percent of NYC taxpayers, the 41,282 filers earning $500,000 or more. They pay 47.8 percent of the $7.3 billion collected by the city in income taxes. The concentration of golden feathers is much greater now than in 1993, when approximately the same share of taxes, 47.6 percent, was paid by more than five times as large a share of taxpayers, the 5.5 percent earning $100,000 or more.

Why has the concentration of taxpayers become so much more intense? Three explanations come to mind: (1) Inflation ($100,000 ain’t worth what it was in 1993). (2) The financial bubble, which in recent years was good to top-earning New Yorkers. (3) The number of NYC personal income-tax filers, which has increased to 4.1 million from 2.7 million in 1990.

One thing hasn’t changed much–average personal income tax rates in Manhattan are higher than in the other boroughs. Back in 1993, the average effective tax rate was 3.05 percent–3.58 percent in Manhattan and less than 3 percent in all of the other four boroughs.

NY City and NY State officials are seeking to raise tax rates further on the highest categories of personal incomes. Council Speaker Christine Quinn has proposed boosting the city's income tax from 3.65 to 4.25 percent for those earning $297,000 or more; to 4.45 percent for those making $532,000 and to 4.65 percent (a percentage-point increase) for the $1.2 million league and above. Comptroller Bill Thompson is supporting higher taxes for the top category.

Albany legislators are also seeking to raise the state income tax -- from 6.85 percent to 8.25 percent for people making a minimum of $250,000; 8.97 percent for those making $500,000 and above in taxable income and 10.3 percent for those at the $1-million-and-up level.

NYC’s budget director, Mark Page, has argued that the City’s golden geese have wings and can fly. He says:

The basic concern is how do you collect revenue from New York City's tax base if you have a relatively small group of individuals paying a very large proportion of your income-tax revenue.

A consoling fact for New Yorkers is that state and local taxes have been deductible against income on which federal taxes are imposed. But there is a question about what new tax rules will emerge from the budget debate that is taking place in Washington.

NYC | Quinn's Fiscal Proposals

Speaker Christine Quinn is attempting to help solve NYC's fiscal problems by raising the rate of taxation of NYC's personal income tax (PIT) on incomes above $297,000, to 4.25 percent (from 3.65 percent), above $532,000 to 4.45 percent and above $1.2 million to 4.65 percent (i.e., a full percentage point increase). The current NY State top rate is 6.85 percent and this is also being considered for an increase.

The PIT surtax is estimated to raise $1 billion and I could be convinced that under current conditions the increase is fair and the brackets well chosen, because:
- NYC has to balance its budget. There are no easy solutions. Those who are high income earners are better able to weather the storm.
- Back in the early days of the Clinton Administration, New Yorkers earning more thsn $200,000 got hit with a surcharge. There was little complaint (New Yorkers voted for him with lop-sided majorities) and the economy recovered well from the recession that hit its lowest point in 1992.
- Anyone in the bracket above $297,000 knows that taxes paid to NYC are deductible from taxable federal income. So the tax is shared with Uncle Sam.
- It's very hard to find a tax that doesn't hurt NYC's competitive situation (the property tax, which is the best of the taxes to raise for competitive reasons, has already been increased), but at least high income earners know that NYC is a good business partner and is a good place to live.
- My friend the late Karen Gerard, former deputy mayor for economic development, once said that after her retirement from the city she worked out a way to save a Wall Street firm millions of dollars by moving to New Jersey. She expected the firm to move. Instead, its reaction was that he savings was "chump change". For many individuals, it would take more than a 1 percentage point increase in the NYC income tax to persuade them to move out of NYC.
- The only tax that doesn't affect the competitive situation of NYC is a tax on land.

On the other hand:
- There would be a competitive effect relative to Connecticut or New Jersey or upstate.
- The top bracket will be high for a city tax. Back in May 2000, when I was Chief Economist in the Office of the NYC Comptroller, we reported a top rate of 3.9 percent, the highest PIT rate for any city that also had a state PIT. Washington, DC had a PIT rate of 9 percent for incomes above $20,000 - but it has no state PIT.
- An increase in the NYC's income tax would have to be approved by the state legislature. Albany has a much bigger budget gap to close than NYC and doesn't have the property tax to fall back on.
- The NYC increase would be on top of whatever increases the state comes up with. The Daily News on Feb. 5 reported that the number of millionaires in New York appears to have dropped by 10 percent, from 48,984 people in 2008 to 44,165 in 2009. The lower Wall Street bonuses would account for much of the change. One proposal would raise the state income tax above the current 6.85 percent for those making $250,000 and above. Others would start at $500,000 or $1 million.
- Gov. Paterson said the last time a temporary tax was approved on the wealthy, in 2003, New York was coming out of a recession. "In contrast, at this point we have not found the floor of this budget deficit, and millionaires - however many of them are still left - can't pay a $48 billion deficit over three years."
- Assembly Speaker Sheldon Silver said there is strong support for hiking taxes on the wealthy, which could raise at least $1 billion. A state surcharge of 1 percentage point on top of Speaker Quinn's percentage point would bring top combined state-city PIT rates to 12.5 percent.
- A fairness issue can be raised based on what percentage of PIT are paid by what percentage of taxpayers. Back in 1997, only 5.5 percent of NYC's PIT filers had adjusted gross incomes (AGIs) of more than $100,000. Yet they paid 57 percent of the PIT.
- A NYC PIT surcharge will be paid mainly by Manhattan residents. In 1997, Manhattan residents accounted for fewer than one-fourth of resident PIT filers, but half of AGIs and 57 percent of the NYC resident PIT tax liability.
- Nonresidents continue to get off lightly. They earned in 1997 on average twice the incomes of NYC residents, and accounted for 37 percent of the earnings of NYC workers, yet they paid only 7 percent of the PIT. Since then, the commuter tax has been eliminated.

Speaker Quinn has also assembled four proposals to help small businesses: Streamlining the permit and licensing process, waiving for 12 months permit and license fees and developing neighborhood marketing campaigns, requiring city agencies to review the effects of new regulations affecting small businesses, and offering commercial kitchen space “at a reasonable fee” to 60 start-up food manufacturers.

Three other proposals are designed to improve municipal efficiency: Merging city agencies with similar or overlapping functions, consolidating the Board of Education’s Retirement System into the general city pension system, reducing “unnecessary administration costs”, and reducing spending on municipal recruitment programs that currently cost the city $30 million a year.

Two proposals relate to R&D and training in the medical and biotech areas: Creating an annual four-year tax credit of up to $250,000 for research and development, facilities and staff training in the area of biotech, and training more nurses by linking experienced nurses to health-care-education programs at the City University of New York.

The remaining four proposals don't fit in any of the above areas: Purchasing the .nyc domain name for New York City businesses, organizations and residents; raising penalties for those who commit gang initiation crimes; creating a one-time amnesty program for those with outstanding violations to pay portions of fines; and improving the referrals of New Yorkers at risk of losing unemployment benefits to public programs like food stamps or Medicaid.

None of Speaker Quinn's smaller proposals would have anything like the fiscal impact of the surtax on personal incomes.