If you overtax the rich, you hurt the poor badly, Mayor Bloomberg tells Obama

Mayor Bloomberg warned yesterday that proposals to tax the rich will backfire and end up hurting the poor whom they are intended to help.

"They [the wealthy] are the ones that buy in the stores so that people that work in the stores have jobs in the stores, generate sales tax," he said.

"The rich are the ones that go to the expensive restaurants where, as a matter of fact, I looked at a list the other day of restaurants where the staff is unionized. They're the expensive restaurants. They're not the cheap restaurants."

"You know, the yelling and screaming about the rich - we want rich from around this country to move here. We love the rich people."

The mayor's comments on his weekly WOR radio show came a day after thousands of union workers rallied outside City Hall to push for higher taxes on those at the top of the income ladder to prevent cuts in government services as revenues contract.

Bloomberg said even the protesters clamoring for increased taxes on those earning $250,000 up had to be aware of the new economic reality.

"We can tax the rich, except that, if you haven't looked at the stock market lately, they aren't making any money," he said.

"I hear the protesters, you know. I think that deep down inside, I assume, they understand that we live in a different world."

Part of that new world is far fewer high-paying jobs on Wall Street and bonuses down 44 percent - sharply reducing the money pumped back into the economy by luxury spending.

In a January report, state Comptroller Thomas DiNapoli said 2009 was shaping up as another very difficult year for the city's most important industry.

"The securities industry has already lost tens of thousands of jobs, and the industry is still writing off toxic assets," DiNapoli reported.

The mayor is taking something of a political risk by going against the sentiment of the day, in which the wealthy are viewed with suspicion.

One labor official accused Bloomberg of being "tone deaf."

But United Federation of Teachers president Randi Weingarten declined to take such a personal potshot. "I respect him," she said of the mayor.

"We disagree on this. What we're doing here is saying, for a period of time, the people who are still doing well should help the people not doing well. Ultimately, that's fundamental fairness."

Bloomberg also stuck up for the rich on another front - maintaining tax deductions for charitable contributions.

In a rare public break with President Obama, the mayor said attempts to lower tax benefits for donations by families earning $250,000 or more would have a devastating impact on charities that have already lost 30 to 40 percent of their endowments.

"The people they depend on for new gifts have lost an enormous amount of money," the mayor said. "And to make it harder by making less deductibility doesn't make any sense to me whatsoever."

david.seifman