Well, as the Economy worsens, the dominoes are starting to fall. Banks and mortgage houses were some of the first, homeowners are filing bankruptcies at record rates and foreclosures are leaving entire subdivisions looking more like movie sets from 60's post apocalyptic horror movies. The auto industry is announcing monthly drops in sales in the double digits EVERY month and layoffs are expected to be 200,000 MONTHLY for the foreseeable future.
And now to the demand side. Local and state governments, who have budgets to address have a couple of options. Cut services or raise taxes [or some mix of the two]. Welcome to NYC...welcome to the new reality.
Bloomberg: NYC Income Tax Could Rise 15 Percent
Mayor Says Promised Property Tax Rebate Is Off Table
NEW YORK (CBS) ― Mayor Michael Bloomberg is going to cut the city work force by 3,000, but that's just the beginning of the pain New Yorkers will feel as part of the fiscal crisis. A slew of new taxes are also on the agenda.
There will be 1,000 fewer cops, but the city will hire 200 more traffic agents to give out $60 million a year in new block-the-box tickets.
"The gravity of the budget situation requires us to propose both deep spending cuts and revenue increases," Bloomberg said.
The spending cuts mean reducing the city work force. The revenue increases mean taxes -- lots of taxes.
In the current fiscal year there's the 7 percent property tax hike that starts in January -- and the plan to renege on a promised $400 property tax rebate.
"I think the people of the city are going to be enraged," City Councilman Simcha Felder, D-Brooklyn, said. "They've been told the check is in the mail on the rebate."
To close budget gaps in the year that starts next July the mayor is thinking about a combination of sales tax increases and income tax hikes.
"Every city agency must push each dollar further," Bloomberg said. "We're going to do that and doing that means making hard choices that will not be popular with everyone or perhaps anyone."
The mayor proposed raising the income tax by either 7.5 percent or 15 percent.
At 7.5 percent a taxpayer making up between $50,000 and $75,000 would pay an additional $116. At 15 percent that same taxpayer would pony up an extra $233.
"When people are suffering to tell them too bad you might suffer even more next year is telling them to eat cake next year," Felder said.
Added Councilman Lewis Fidler, D-Brooklyn: "Nobody likes to raise taxes and it's not something I'm planning on doing unless I'm absolutely sure we've exhausted every other reasonable resource."
But not everyone thinks the tax hikes will help the city's finances.
"Increasing the personal income tax would be a disaster for the city," said Nicole Gelinas of the Manhattan Institute. "It's hard to overestimate that fact. We've already got the highest local personal income tax in the nation."
The mayor said he thought his proposals would generate some lively discussion with the City Council.
Council Finance Chairman David Weprin, D-Queens, said he's going to hold hearings on the tax proposals.
wcbstv.com - Bloomberg: NYC Income Tax Could Rise 15 Percent