Following the lead of Gov. Christine Todd Whitman in New Jersey, State Senator George E. Pataki, the Republican candidate for governor, yesterday proposed deep and broad-based cuts in personal income taxes that would reduce the tax bill of virtually every New Yorker.
Coming a week after he was bitingly criticized by other Republicans for not detailing an economic plan, Mr. Pataki said he would cut the top income tax rate by 25 percent over four years and reduce the number of people paying that rate. By 1998, the plan would reduce state revenues by $5.6 billion, making it one of the largest tax cuts in state history.
"Taken together, these measures will go a long way toward making New York once again the place the most enterprising people flock to, not the one the flee from," Mr. Pataki said in a speech in Manhattan to trustees of the Citizens Budget Commission, a fiscal watchdog group financed by businesses.
Mr. Pataki offered only a general outline of how he would pay for the tax cuts. He said he believed the state work force could be cut by one-third and state agencies could be consolidated without reducing services. But that would raise only $300 million of the $5.6 billion. He also included one-time revenue sources like selling the governor's 28-year-old airplane and two helicopters.
The bulk of the tax cut would be paid for by holding the growth of state spending, most of which provides aid to local governments and schools, to the rate of inflation, 3 percent this year. At the same time, Mr. Pataki is counting on a vibrantly growing economy to increase state revenues by 6 percent a year, even with the tax cuts.
Economists said that even a slight economic downturn could undermine the plan, driving down tax revenues and forcing the state to cut services, which could in turn pressure local governments to raise local property taxes.
"If everything was hunky-dory now, there is a chance it would work," said Frank J. Mauro, director of the Fiscal Policy Institute, a nonprofit group financed by labor unions and foundations that frequently opposes tax cuts. "But we're not at a stable position now."
Gov. Mario M. Cuomo, a three-term Democrat, called the proposal a "magic act" that would require "holy water" to get through the State Legislature. And he called himself the only real tax cutter in the race, having signed income tax cuts in 1985 and 1987, though the final phase of the 1987 bill has been postponed since 1990 because of the recession.
"The other candidate does not have the same credibility," Mr. Cuomo said of Mr. Pataki after he announced a child-health program in Harlem yesterday.
As much as it was an economic plan, Mr. Pataki's proposal also seemed a political position paper. It placed him on the offensive in a tax-cut duel with Mr. Cuomo, who last week hazily outlined $1.5 billion in income and business tax cuts. It gave Mr. Pataki a platform plank that would appeal to almost every taxpaying New Yorker. And it sought to answer, at least in part, critics who have said his ideas are shallow and unformed.
Mr. Pataki cited the example set by Mrs. Whitman, who has promised to cut state income taxes by 30 percent over three years, as his model, saying she has shown that reduced state spending can pay for deep tax cuts. One of the architects of her plan, Malcolm S. Forbes Jr., the publisher of Forbes magazine, was also an economic adviser to him. And like her, the candidate released the plan with six weeks left in the campaign.
Income taxes are New York State's single largest source of revenue, accounting for an estimated $17.6 billion this year, 54 percent of the $32.9 billion the state expects to raise through taxes and fees.
Mr. Pataki would cut the tax in several ways. He would reduce the top rate from the current 7.875 to 5.9 by 1998, a 25 percent decrease. He would raise the annual income for the top tax bracket from the current $26,000 for a married couple to $50,000, removing "several hundred thousand" middle-income families from that top level, he said.
He would also keep the bottom tax rate at 4 percent, which he said would help low-income New Yorkers. That rate is to rise to 5.5 percent under the 1987 tax cut law.
Other provisions in the plan include replacing the $1,000 exemption for dependents with a tax credit of $200 per dependent, a change that Mr. Pataki said would be most beneficial to less wealthy taxpayers, and increasing the standard deduction to $13,000, from $9,500, for married couples. Mr. Pataki said he would also phase in an existing earned income tax credit for low-income families in one year instead of three.
For a family of four with an adjusted annual gross income of $45,000, Mr. Pataki's plan would reduce their state taxes to $985, from $1,920, a 49 percent decrease, according to figures provided by the Pataki campaign.
There is a risk for Mr. Pataki in modeling his plan after Mrs. Whitman's and praising her ability to balance her budget despite $122 million in tax cuts this year. The balancing act involved laying off state employees, freezing state aid to most municipalities and school districts and resorting to about $1.8 billion in "one-shot" savings.
In the past week, Mr. Pataki has been sharply criticized by one of his own running mates, Herbert London, the candidate for State Comptroller, for not offering a detailed plan to stimulate the economy. Yesterday, Mr. London's campaign said they would not comment on Mr. Pataki's new plan until after they had met with him.
Another Republican critic of Mr. Pataki, New York City Mayor Rudolph W. Giuliani, also expressed concerns that the tax-cut plan would lead to reductions in state aid to the city. "It depends very much on how you do it," said Mr. Giuliani.
Mr. Pataki has been pursuing Mr. Giuliani's endorsement, and in his speech to the budget commission he spoke glowingly of Mr. Giuliani's efforts to cut city spending.
Mr. Pataki also used the 35-minute speech to underscore his differences with Mr. Cuomo. "The Cuomo philosophy, basically, is that whatever sounds virtuous is, ipso facto, the business of government," Mr. Pataki said. "That's wrong."
Mr. Pataki's aides said they expected to release this week television commercials about the tax cuts. One spot is intended to spoof Mr. Cuomo's claim to be a tax cutter by suggesting that the appearance of Elvis Presley on Long Island is more likely than a tax cut under Mr. Cuomo.
