Steve Israel Attacks Redistribution of Wealth, or Does He?

by Bill O'Connell on December 7, 2010

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For years Daniel Patrick Moynihan, one of the most thoughtful and erudite public servants we have had, published a document New York and the Federal Fisc that described the flow of dollars from New York and the great imbalance on the return trip.  Steve Israel seems to have taken up that mantle but his votes in the House are baffling.

In an article published in Newsday today titled, “Rep. Israel: Poorer states take NY’s share,” he has this to say,

“Nobody should be paying more than they get,” Israel said. “The unfairness should not be based on where you live. That’s what really drives me crazy. It’s not necessarily the numbers; it is the discrimination against states like New York” that have more high-income earners.”

That statement opens up at least three contradictory positions that Steve Israel has taken and indicates how out of touch the progressives are with the majority of the American people.  Let’s look at the three issues:

  1. Redistribution of Wealth – is it a good thing or a bad thing?
  2. Why send money to Washington if it is only going to send it back, albeit with a healthy chunk of overhead removed?
  3. If New York is discriminated against because it has high income earners – is increasing taxes on high income earners by making permanent the Bush tax cuts a bad thing or a good thing?

Redistribution of Wealth

Steve Israel votes with his party 98.7% of the time.  We all remember what Barack Obama said to Joe the Plumber, “I think when you spread the wealth around, it’s good for everybody.”  He has voted for the very policies he complains about.  Let’s do some quick math.  Steve Israel voted for the $825 billion stimulus bill.  The stimulus, according to Recovery.gov, brought about $249 million into Mr. Israel’s district.  But based on the relative wealth of his district, his district pays about 0.4% of the nation’s individual income tax.  To make the number’s easier, if we assume that the stimulus borrowing will be repaid exclusively through individual income taxes, that means Mr. Israel’s district will have to re-pay $3.3 billion of the stimulus debt.  So he voted to send $3.3 billion to the rest of the country in return for $249 million for his constituents.  So what’s his argument?  His wound appears to be self-inflicted.

Round Trip Ticket for Your Tax Dollars

Mr. Israel has a 100% rating from the National Education Association, the teacher’s union.  Mr. Israel is part of the federal government.  Nowhere in the Constitution is the Congress empowered to do anything about education.  Education has always been a local matter.  We have local school boards who run the schools, and the bulk of our property taxes go toward funding the schools. 

But we also have a Department of Education.  So what do we do?  We tax the same people who pay for schools through property taxes and state taxes and we send that money to Washington.  The Treasury takes a cut to pay for the added resources it needs to manage this revenue.  The Department of Education takes a cut to pay for their overhead, and then the money is sent back to local school districts as federal aid.  Why not abolish the Department of Education and keep 100% of those tax dollars locally to pay for schools rather than eighty cents on the dollar for the privilege of having the geniuses in Washington handle our money and tell us what to do?  On top of that, what guarantee do we get that a further portion of our tax dollars are not going to pay for another state’s education instead of ours?  If we don’t give the money to Washington in the first place, they can’t give it to someone else rather than returning it.  It is lunacy. 

The article then describes this bizarre exchange:

Israel said “the fairest” situation would have each state receiving the same share of federal funding that it pays in federal taxes. He was asked if states should just keep all their revenue instead.

“It’s priorities!” he said. “The federal formulas need to be changed. It’s not as simple as saying it should be 1-1; it’s the formulas that need to be changed.”

It’s the formulas?  Why in the world would you send tax dollars to Washington and then expect to get an equal amount back?  Why send it in the first place?  If Washington kept to the powers enumerated in the Constitution, most of this discussion would be moot.  The Founding Fathers created the federal government to deal with mostly national issues concerning defense and foreign nations. In carrying those out I want the military to decide where to place their forts, arsenals, naval bases and not to make sure that we have the same amount in every Congressional district. 

The Bush Tax Cuts

Steve Israel has a voting record on tax policy:

  • He voted against retaining reduced taxes on capital gains and dividends (Dec 2005)
  • He voted against making the Bush tax cuts permanent (April 2002)
  • He voted for raising taxes on those making over $250,000 (Dec 2010)
  • He received an 18% rating from the National Taxpayers Union meaning he’s a big spender (Dec 2003)
  • He received an 83% rating from Citizens for Tax Justice, meaning he supports progressive taxation (Dec 2006)

How do you square these positions with the complaint that New Yorkers send more tax revenue to Washington than they get back?  He voted for those very policies.  He wants to raise taxes on the wealthy and then complains that New York sends more to Washington because we have wealthy people living in New York. Exactly where does Mr. Israel think those tax revenues are going? 

Solving the Problem

The problem may actually solve itself.  Because New York also has high state taxes, high property taxes, high city taxes, and high sales taxes, those wealthy folks might move to Texas or some other state.  Then Mr. Israel and his fellow progressives can finally be in the enviable position of begging Washington to send more money to a bankrupt New York than New York sends to Washington in tax revenue.

That’s my opinion. I’d like to know what you think.  Please add your comments below.

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