In all the debate about the pending federal aid package for cities and states, you’d think something so obvious would have been said often, but it hasn’t been: America cannot bail itself out.
Bailing the nation as whole out is exactly the idea behind the $350 billion package of federal aid proposed in the American Rescue Plan now pending in Congress. It would provide $220 billion to state governments and $130 billion to local governments.
The allocation is based on population – so far, at least, in the pending bill. For example, Illinois has about 3.9% of the nation’s population, so it would get about $13.6 billion of state and local money, which is about 3.9% of the $350 billion.
One of these political events was the War of 1812. This war may have inspired Francis Scott Key to write “The Star-Spangled Banner” as he famously watched the rockets red glare over Fort McHenry, but it was also straining our fiscal resources and the war effort needed to be financed.
Enter the idea of a progressive income tax – based on the British Tax Act of 1798 (which should have been our first warning). Fortunately for the time, the War of 1812 came to a close in 1815, and the discussion of enacting an income tax was tabled for the next few decades.
Ever so stubborn, progressive individuals were hell-bent on enacting income taxes, and they eventually found a way to do this at a local and state level. In time, they would reignite a new movement for the adoption of the federal income tax.
Viewers of Andrew Cuomo’s Emmy-award winning Covid-19 briefings may have noticed how the New York Governor has become increasingly excitable. In this week’s budget show, he pointed an economic gun at New York and threatened to shoot if Washington doesn’t fork over $15 billion.
“If the federal government doesn’t fund state and local governments, it’s going to hurt all New Yorkers,” Mr. Cuomo warned Tuesday while proposing to raise the state’s top income tax rate in New York City to 14.7%. This would be the highest rate in the country, at least until New Jersey Gov. Phil Murphy makes a competing bid.