(snip)"The New York City Council Monday begins hearings on a series of proposed spending cuts and tax increases, while in Albany, the state capital, Gov. David Paterson reconvenes the legislature Tuesday to consider rolling back already approved spending increases on health and education to close a $2 billion funding gap for the current year.

New York state also faces a $12.5 billion deficit in 2009, and the Democratic governor has said he would ask labor unions to forgo 3% raises called for by contracts that would have to be renegotiated. But Gov. Paterson has rejected calls for higher taxes on the wealthy -- unlike New York City Mayor Michael Bloomberg, who has proposed tax increases."(snip)

(snip)"Mr. Bloomberg -- who recently secured a term-limits exception so he can run for mayor again in 2009 -- has said it will be a "number of years" before the city's banking sector starts paying taxes again, and he has budgeted zero tax liability for the industry for the next two years. To close a two-year, $4 billion gap, he has floated increasing New York City's sales tax by 3% and the income tax by 15%. That would raise the top marginal rate for city and state taxes, already the highest in the nation, to more than 11%.

New York's governor blames the state's current shortfall, in part, on its failure to better manage revenue during the years of soaring Wall Street profits. "What's actually more embarrassing than the fact that we have such a huge deficit now, when bonuses are down and capital gains are down, is the fact that when there was...wealth, we overspent," says Gov. Paterson.

In 2001, New York state was able to close a budget gap with a temporary income-tax increase, but some say that may not work this time because Wall Street is undergoing a structural realignment, not a cyclical downturn. If the financial industry re-emerges as one that is more tightly regulated and more risk-averse, that could mean fewer years of record profits.

"It suggests that the city and the state will have to tighten their belts permanently," says Kathryn Wylde, president of the Partnership for New York City, a group of chief executives. "The financial-services industry will never be the bonanza [for the city] that it once was."(snip)


if you are a full time serious dancer in an upper echelon NYC club, this means that next year ... between Obama's proposed 39.6% federal income tax rate, plus an 11% New York state plus city income tax rate, 50% of your gross income will have to be paid out in income taxes. This does NOT include existing or additional Social Security / medicare 'self employment' taxes ( which could add another 8-10% or so depending on what Obama actually does with the existing SSI tax ceiling).