Thursday, September 21, 2006

"Juice for the Apple"

Is there hope for New York?

The two money paragraphs of today's Wall Street Journal "Juice for the Apple" editorial:

Enter GOP candidate for Governor John Faso, who is expected to release a tax reduction plan today that could at least put New York back in the game for jobs and investment. At the urging of such advisers as economist Larry Kudlow, Mr. Faso will propose to repeal the state's tax on dividends and capital gains over four years and immediately zero out the capital gains tax on all new investment in the state. Since the amount of new investment under the current tax regime is so microscopic, eliminating that capital-gains levy would cost the state almost nothing in lost revenue even on a static basis.

It's always been a strange paradox that New York, which fancies itself the financial capital of the globe, tries to repel capital with high taxes. Mr. Faso will also propose cutting the corporate income tax, as well as indexing the personal income tax brackets for inflation while chopping the top marginal rate to 6.25% from 6.85% (plus 3.65% if you live in New York City). The Big Apple's top rate would fall below 10% for the first time in decades. "When it comes to taxes, the world is flat and New York should be too," says Mr. Faso, referring to the flat-tax movement sweeping Europe and other parts of the world...

New York needs smart money and smart people. The tax climate must be hospitable rather than cold shoulder punitive. A tax-free state zone for new investment would be a huge plus. Come to think of it, a tax-free zone for new investment for the entire U.S. would be a big plus. From sea to shining sea.