The House and Senate have reconciled their versions of the ballyhooed economic stimulus plan. It promises federal money for job creation, the president's "signature tax cut" for millions of lower- and middle-class families (the 95 percent of Americans promise), and billions for states to help them with their budget deficits.
Regardless of whether you agree with the size and scope of the plan, for it to have any chance of working, the dollars must truly trickle down to the families and individuals who so desperately need the help.
This means governors, state lawmakers and mayors must be prevented from undercutting the impact of the stimulus by turning around and raising taxes on middle- and lower-class families, including taxes on the everyday goods and services they buy. Nor should they raise taxes on businesses that provide good-paying jobs with strong health benefits. Yet, this is a very real and dangerous threat in many states.
What good is the stimulus if state and local leaders simply turn around and impose higher taxes on groceries (including our industry's products), health care, clothes, gasoline, parking, television and other consumer goods, which several states are either proposing or considering right now?
Again, let's look at New York. Albany continues to be a real and scary example. The Congress' stimulus package as it stands right now provides a tax break of $800 for families and $400 for individuals (mostly through lower withholdings in your paycheck.)
That's laughable to New Yorkers right now. Gov. Paterson has spent that federal tax cut 5 times over for them. The governor's proposed 137 tax hikes on everyday goods and services are estimated to cost the average family of four about $4,000 in tax increases. So New York families will actually get a $3,200 tax hike out of this deal – in a recession! As more jobs are being cut everyday!
Congress should attach some strong strings to the state money to ensure the stimulus passes through – and is meaningful -- to the real people hurting in this recession.
One idea: Impose a penalty on states that raise taxes or fees on their citizens. Such states would get their slice of the stimulus package cut by 33 percent. (After all, if states are going to use the power of their purse to raise taxes, why should they get help from federal taxpayer dollars too?)
We're open to any other ideas that ensure state tax policies don't undermine the stimulus. Call your U.S.congressman and senator and make sure this stimulus truly protects you before the final vote this week.
Bottom line: Nearly $800 billion of taxpayers' money is being invested in helping families and our economy dig out of this recession. States shouldn't be allowed to reap the benefits of the stimulus largesse, just to turn around and sock it to their families with higher state taxes.
Bad for families. Bad for business. Bad for the economy. And ultimately a gigantic waste of money.