OpinionColumnistsE.J. McMahon By E.J. MCMAHON @EjmEj Soaking the rich is a shaky strategy De Blasio and Cuomo Photo Credit: Mayor Bill de Blasio and Andrew Cuomo meet in Albany. (Philip Kamrass) Updated February 4, 2014 5:29 PM Print Share Share Tweet Share Email Gov. Andrew Cuomo and Mayor Bill de Blasio remain locked in a political and legislative tug-of-war over how to pay for expanded public pre-K education. Cuomo wants to phase in a statewide pre-K program, but de Blasio prefers a much more expansive initiative supported by a dedicated stream of higher income taxes on NYC residents earning more than $500,000. He called this a "stable, consistent and reliable funding mechanism." In fact, high-income New Yorkers are probably the least stable, consistent and reliable segment of the city's income tax base. According to state tax data, there were 49,000 city households with adjusted gross income of more than $500,000 as of 2007. They earned $135 billion that year. Then came the Great Recession. Over the next four years, the incomes of New Yorkers earning less than $500,000 dropped by 5 percent, then bounced to pre-recession levels. But adjusted gross income in the $500,000-and-above bracket sunk nine times faster, to $75 billion by 2009. As of 2011, the most recent state data show, the adjusted gross income for this group remained $42 billion below the pre-recession level. So, if de Blasio's pre-K program had been in effect as of 2007, it would have lost a huge chunk of its funding in the next few years. As it is, the highest-earning 1 percent of residents and workers generates more than 40 percent of both state and city income taxes. Cuomo himself has doubled down on the wealthy, twice extending a state income tax hike on taxpayers earning $1 million or more ($2 million for married couples filing joint returns). Politicians can't say they haven't been warned about the risks of balancing budgets on a tiny pinnacle of wealthy households. In 2009, for example, a state Assembly report pointed out that New York had become heavily reliant on "inherently unstable" and "unsustainable" revenues generated by its richest residents. The report warned that changes in compensation practices in the finance sector would slow the growth of taxable income in top brackets, which is, more or less, what happened. That report was issued by the staff of the Assembly Ways & Means Committee, headed at the time by Dean Fuleihan -- who is now de Blasio's budget director. E.J. McMahon is a senior fellow with the Manhattan Institute and president of the Empire Center for Public Policy. By E.J. MCMAHON @EjmEj E.J. McMahon is a senior fellow at the Manhattan Institute for Policy Research and its Albany-based Empire Center for New York State Policy. McMahon joined the Manhattan Institute in 2000, and was instrumental in the Center's founding in 2005. His professional background includes more than 25 years as an Albany-based policy analyst and close observer of New York State government. As chief fiscal advisor to the Assembly Republican Conference in the early 1990s, he drafted a personal income tax reform plan that would become the basis for historic tax cuts enacted under Governor George E. Pataki. He also served as a deputy commissioner in the state Department of Taxation and Finance, vice chancellor of the State University of New York, and research director of the Public Policy Institute of New York State. A native of Westchester County and graduate of Villanova University, he began his career as a staff writer and columnist for daily newspapers in the lower Hudson Valley and Albany. Share on Facebook Share on Twitter Comments Comments section is temporarily on hold. Here’s why.