America’s muni-bond market takes criticism from several fronts. Because the market’s tax benefits are valuable mostly to high-net-worth individuals, its pool of potential investors is limited. Pension funds, endowments, and other investors already exempt from taxes have little interest in the market. Plus, the market can’t reach global investors because they aren’t interested in saving money on U.S. federal, state, and local taxes, either.

But in this market, these constrictions have become protections. The muni bond market has stayed at least functional during the two-year-old credit crisis because it’s somewhat — not completely — insulated from the strongest global forces of demand destruction. (more…)

As the projected operating deficit at the state-run Metropolitan Transportation Authority increases by as much as $650 million, to nearly $2 billion, MTA board members have gone to Albany today to continue their lobbying for the Ravitch plan.

The proposal includes an idea to raise $600 million annually via a new toll on the currently free East River and Harlem River bridges, mostly to raise money for capital projects.

In theory, a toll on the bridges isn’t a bad idea. People would pay for the bridge in money, not in traffic-waiting time. Current economic circumstances are making it a bad idea right now, though. (more…)

An enormous income tax hike proposed by some New York lawmakers with backing from a coalition of public-sector labor unions would cost the state at least 22,000 private-sector jobs, according to a new analysis issued by the Manhattan Institute’s Empire Center for New York State Policy.

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Avi Schick, head of the Empire State Development Corp. for 2007 and 2008, has a bad idea in today’s Daily News. He wants to use our taxpayer-guaranteed state and city pension funds to prop up the teetering local construction and commercial-real estate industries. “How would this … work?” Schick asks.

Answer: it wouldn’t, and it would likely exacerbate our commercial real-estate problems while imperiling pension funds and thus tax dollars. (more…)

“The prospects of an early agreement between [New York City] and its bankers on an economy program … to avert payroll and interest defaults … remained doubtful yesterday.

“While the city and its bankers, with Governor Lehman sitting in, were striving to compose their differences, the city’s troubles were augmented by indications that the New York Stock Exchange was determined to carry out its threat to move to New Jersey rather than submit to … a 4-cent tax on stock transfers and a tax on brokers. (more…)

Macquarie Infrastructure Group, partner in the long-term Indiana Toll Road “public-private partnership,” released some financial results yesterday. The document illustrates how much riskier the market perceives such deals to be. The details once again point up the fact, then, that such long-term infrastructure leases aren’t a good way for states and cities to get out of their current budget woes. (more…)

With more than $200 billion in federal stimulus money going directly to states, one might think that the feds were done bailing out the not-so-thrifty of the fifty (plus Puerto Rico). Municipal Market Advisors, which studies the state and local government bond markets, doesn’t think so. (more…)

The Times offers some evidence that a couple hundred million dollars (at least) of the Ravitch plan to raise $2.1 billion in new money annually for the state-run Metropolitan Transportation Authority through new bridge tolls and a payroll tax wouldn’t actually be new revenue going to the MTA. It would be a stealthy indirect tax hike benefiting the government of New York City instead. (more…)

In her state of the city address, City Council Speaker Christine Quinn just proposed a 15 to 26 percent hike in the city’s income-tax rate for mid-six-figure earners and above. Together with a proposed state tax hike, the idea would bring New York City’s top rate to nearly 14.95 percent, two-thirds higher than the top rate in New Jersey! (more…)

Just in time to further debunk claims that the wealthy don’t pay their “fair share” of New York State taxes, the Assembly Majority Ways and Means staff has issued a pessimistic new assessment of the economic outlook (”bleak”) and revenue forecast (sinking fast).  And right there on p. 80 of the Ways & Means Revenue Report is this passage:

New York, like the Federal government, utilizes a progressive personal income tax structure. This method of taxing naturally implies a higher weight on the contributions of the State’s most wealthy taxpayers. As a result, a progressive tax structure has a more elastic response to market volatility than a less progressive structure.

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