Cutting Wall Street rebates would help fund schools
For a lifelong believer in a strong education, representing the 110th Assembly District, which demands quality in education, has been a pleasure and a challenge.
The school districts in the 110th have very different needs.
Schenectady (two-thirds of Schenectady is in the 110th) seeks to overcome years of adverse economic impact; Niskayuna is struggling to maintain its high level of service without the commercial tax base needed to sustain funding schools through the property tax; North Colonie, by contrast, has a strong commercial tax base; and South Colonie advocates for universal pre-kindergarten because it has seen students in that program jump-start their education.
Schenectady is seeking federal intervention to force the state to honor its past promise, made before the recession dampened state revenues, to fully fund its schools. Underfunding disparately impacts the district’s substantial minority population.
As a civil rights attorney experienced in the same law Schenectady is relying on, I agree with the principle but am concerned this approach will not bear fruit soon enough.
Disparate impact litigation, which seeks to remedy policies that are discriminatory in effect, rather than intent, is unpopular in the courts.
In our cumbersome legal system, any relief could be a decade away.
Politically, New York state is very complex, with greatly differing regions. The several education funding formulas give something to each.
Republican control of the Senate results in disproportionate aid flowing to wealthy areas that are their political power base.
For example, Niskayuna is classified by the state Education Department as an average-wealth district. There are districts with four or five times the wealth of Niskayuna that get more than their fair share of school aid.
Conservatives like to point out that New York spends among the highest in the nation on education.
But spending is poorly distributed and concentrated in districts that can raise revenue through the property tax, unlike places like Schenectady and, now, even Niskayuna.
We are in the midst of so-called educational “reforms,” brought to you by the same corporate philosophy that led to near economic disaster.
Expecting increasingly beleaguered teachers to solve problems that are essentially economic in origin will fail, just as the “free market reforms” of the 1980s and 1990s ultimately failed our economy.
The obsession with testing, not to promote student learning but to measure teacher performance, wastes resources and transfers public dollars to private testing companies.
Higher standards like the Common Core represent progress (asking for little yields little in return), but that is different from testing mania.
Two proposals would move our state forward:
First, I agree with New York City Mayor Bill de Blasio’s proposal to increase taxes by 1 percent on those earning $500,000 to $2 million a year to fund universal pre-K (I introduced the same bill in 2013 but without targeting the revenue).
These taxpayers recently saw a 2 percent decrease in their tax rate, so they are now taxed only 0.4 percent higher than those earning $40,000 a year. A 1 percent correction is in order.
Second, New York needs to end the tax rebate to Wall Street.
What? You did not know such a thing existed?
Well, it does.
Since 1915, New York has taxed the sale of securities. Nonetheless, the securities industry flourished.
In 1979, the state began rebating the tax to the point where the rebate reached 100 percent, which is excessive and no longer justifiable. The rebate arose amidst overexuberance about stimulating the economy through tax cuts and unleashing the financial sector.
According to Nobel Prize-winning economist Joseph Stiglitz, who favors the tax, that economic philosophy encouraged speculation, did not promote investment, led to economic collapse and caused a hollowing-out of the middle class.
Stiglitz observed that 50 percent to 60 percent of trading is now done by computers without any real evaluation of firms as targets of investment.
“Flash trading [does] not really create value: The overall efficiency of the market economy may even be reduced,” he said. “Through our bailouts and myriad hidden subsidies, we have, in fact, been effectively subsidizing the financial sector.”
Numerous other countries impose this tax without any reduction in productivity or efficiency, including Germany, the leading economy in Europe.
Reducing the rebate to 60 percent would raise $6.4 billion in revenue. With that money, we could address both our educational needs (approximately $1.9 billion) and reverse the deterioration of our state’s infrastructure.
Gov. Andrew Cuomo does not agree with my approach, which is based on Keynesian economics (Stiglitz is a Keynesian).
In our political system, all three branches of government are rarely aligned in their viewpoint. So we must cooperate with the governor to get things done.
Nevertheless, it behooves the governor to take notice that the existing school aid structure is causing harm even to school districts that have tried their best to cut costs and stay within the property tax cap.
Phil Steck, a Democratic member of the state Assembly, represents the 110th District.