Cuomo’s small-bore tax plan

The surprising thing about Gov. Cuomo‘s tax relief plan is that he’s thinking so small.

Three years ago, he rightly declared in his inauguration speech, “This state has no future if it is going to be the tax capital of the nation.” But he didn’t get around to proactively cutting taxes until now, as he gears up to run for reelection in 2014. And the $2 billion relief package he’s proposing — while a step in the right direction — will barely budge New York’s status as a high-tax state.

Can this be the same reach-for-the-stars governor who pushed through a historic same-sex marriage law in his rookie year, or who demanded — and won — some of the nation’s toughest gun controls in the aftermath of Newtown?

Cuomo deserves enormous props for bringing real fiscal discipline to Albany. He not only delivered three on-time budgets in a row — the first time that’s happened since 1984 — but held overall spending growth to a tight-fisted 2% or less. He persuaded the Legislature to pass a 2% cap on property taxes, dramatically slowing what’s widely considered to be New York’s most punishing levy, especially upstate and on Long Island. And he took on politically powerful public employee unions to scale back government pensions and negotiate contracts that held the salary scale flat for three years.

That leaves tax-cutting, or the lack thereof, as the big weak spot on his otherwise solid record as a fiscally conservative Democrat.

Cuomo takes credit for “cutting” income taxes in 2011 — and, in particular, reducing middle-class rates to their lowest level in 60 years. But what he really did was stop an emergency surcharge on the wealthy, enacted during the Great Recession, from expiring on schedule, as he had previously promised. Instead, with Occupy Wall Street chants ringing in his ears, he continued the high-income surcharge at a somewhat lower rate, cut taxes for the middle class — and still came out $2 billion ahead.

He’s pulling a similar trick with the so-called 18-a surcharge on energy bills. It was due to expire this year. He extended it through 2016. And now, at the behest of a tax commission he appointed, he’s proposing to reverse course, “accelerate the phaseout” — and call that a “cut.”

In fact, this accounts for a tenth of the larger tax cut package that Cuomo says will deliver $2 billion in relief by 2016.

To put that in perspective, former Gov. George Pataki — who ousted Cuomo’s father — pushed through a 1995 income tax worth $3.6 billion in its third year. Correcting for inflation, that would be $5.5 billion in today’s dollars — more than double the current governor’s proposal.

Cuomo’s plan includes $1 billion in tax cuts for businesses, including an across-the-board reduction in the corporate tax that should foster job creation and boost our economic competitiveness.

The other $1 billion would go to property tax relief. That’s not a cut, technically, since property taxes are controlled by local government, not the state. Instead, Cuomo intends to provide state-funded credits and rebates to hard-hit home- and business-owners.

This backdoor approach comes with downsides. First, it tends to shortchange New York City residents, roughly half of whom rent. Cuomo aims to fix this by throwing in some kind of credit for renters.

The more serious objection is that this approach fails to attack the root of high local taxes, which is high local spending. In effect, Albany will be subsidizing local governments instead of giving them tools and incentives to cut costs.

A few obvious fixes would be to get rid of things like the only-in-New-York “scaffold law” that holds owners and developers 100% responsible for workplace injuries no matter who’s at fault, significantly upping construction costs; the so-called Wicks Law that nonsensically wastes millions by requiring local governments to hire multiple contractors for building projects, and the Triborough Amendment that locks in salaries and benefits for public employees after their contracts expire, giving unions little incentive to consider givebacks at the bargaining table.

Reforming those and other wasteful laws would save taxpayers a lot more than $2 billion a year, and pave the way for game-changing tax cuts in the future.

Yet Cuomo all but dismissed these issues on Monday as “nonstarters,” given how much clout unions have at the Capitol.

“These are very difficult issues for the Legislature to take up on a political level,” Cuomo said. “We’ve tried before. We’ll try again. But it’s very difficult politically.”

Cuomo shouldn’t sell himself short. Surely, the governor who worked minor miracles on marriage equality, gun control and a property tax cap could think a little bigger in his reelection year.

whammond@nydailynews.com