ASSIGNMENT:Assume the role of chief analyst of the State of New York Assembly Committee on Cities....

Question

ASSIGNMENT:Assume the role of chief analyst of the State of New York Assembly Committee on Cities. The members of the committee have asked you to take a thorough look at the commuter-tax issue and to present your analysis and recommendations to the Assembly in a professional memorandum. In particular, you have been asked to evaluate the pros and cons of Mayor Bloomberg’s proposal, to examine other possible commuter tax proposals, and to recommend the course of action that you think is best. You may support the Bloomberg proposal, support some other commuter tax proposal for New York City, or reject the idea of a commuter tax altogether (in which case you should propose some alternative support). Be sure to apply the tax evaluation criteria reviewed in class to support your arguments .You memorandum must not exceed 800 words and should be in double spaced format
	
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CASE 
 
PPA 735/ECN 635 
 State and Local Government Finance  
 
Professor Yinger 
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[1]
 
A COMMUTER TAX FOR NEW YORK CITY?
  
Introduction  
 XXXXXXXXXXIt is the spring of XXXXXXXXXXNew York City’s economy has been pummeled by a 
national recession and by the economic after-effects of the terrorist attack on the 
World Trade Towers.  The city’s economy ended 2002 with an unemployment rate far 
above the national average and an accelerating loss of private sector jobs.  In fact, 
the city’s jobless rate jumped by 1.1 percentage points in 2002 and ended the year at 
8.4 percent.  The national rate, now 6.0 percent, rose just 0.2 percentage points over 
the same period. 
Because of this economic decline, New York City’s government faces falling 
revenue and increasing costs and is having a very difficult time making ends meet.  
As New York Times columnist Bob Herbert put it on November 14, 2002:  
We are witnessing the first stage of what may become a precipitous decline in 
the city's quality of life. All the tax arrows are pointing up and all the service 
arrows are pointing down. Hunger, homelessness and unemployment are big 
problems. Library hours are shrinking and resources are being carted away 
from a school system that was already in deep trouble.  It won't be long before 
sharp cuts are felt in such vital areas as police, fire and sanitation. 
In December, 2002, at a speech before the Citizens Budget Commission, a watchdog 
group funded by some of the city’s major business leaders, New York City Mayor 
Michael Bloomberg put the size of the city’s budget gap for the next fiscal year at 
$6.4 billion.  Depending on how you calculate, this shortfall represents a sixth of the 
city’s budget or a quarter of it.  The lower figure is the gap expressed as a proportion 
of all city revenues, the higher as a proportion of only those revenues raised from 
city taxpayers.  Measured another way, the...

David · Accepted Answer

Memorandum
Running Head: MEMORANDUM
1
PAGE  
3
MEMORANDUM
Memorandum
Name
Institution
Memorandum
To: The State of New York Assembly on the Committee on cities
From: The Chief analyst 
Subject: Analysis of Mayor Bloomberg’s Proposal on Commuter Tax
With the New York City facing a budget deficit of $6.4 billion in the 2003 fiscal year, Mayor Bloomberg has come up with a plethora of aggressive courses of action to cover this budget gap. The most controversial action has been the proposal to introduce a new commuter tax. The proposed commuter tax rate of 2.7% is to be levied on the incomes of those who work in the city but live elsewhere (Yinger, 2009). However, the proposal to introduce the new commuter tax has been met with both intense criticism and support. This report analyses Mayor Bloomberg’s proposal for the introduction of commuter tax in New York City, looking at the pros and cons of Mayor Bloomberg’s proposal, examining other possible tax proposals and recommending the best course of action. 
The Pros and Cons of Mayor Bloomberg’s Commuter Tax Proposal
The benefits and costs of the new proposed commuter tax proposal can be evaluated based on four key tax evaluation criteria. These are the economic efficiency of the commuter tax, the impact on equity, its adequacy and its feasibility.
Pros
A commuter tax would reduce the debt burdens of city residents since they would only pay in part for public goods provided within New York. However, this will be compensated by a rise in land and property rates as moving to the city becomes more desirable to the suburban residents who want to cut on commuter costs. Since commuter into New York City increase the New York budget by about 2.2% to 3.

ASSIGNMENT: Assume the role of chief analyst of the State of New York Assembly Committee on Cities. The members of the committee have asked you to take a thorough look at the commuter-tax issue and to...

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