Raising taxes on the wealthy will mean less revenue

It also requires overlooking the impact of higher state income taxes in New York City, where the current combined state and local income tax rate of 12.62 percent is already the highest in the nation.

Meanwhile, back in the real world, Albany is now reaping the predictable consequences of Paterson's cave-in to the Legislature's demand for higher income taxes.

Since the mid '90s, New York has become increasingly reliant on taxes generated by a small number of high-income households. By 2007, the top 1 percent of earners was generating 41 percent of the state's income-tax receipts.

This tax structure was "inherently unstable," "volatile" and "unsustainable," as the state Assembly Majority Ways and Means Committee staff acknowledged in a report last February.

Yet, with a big push from Assembly Speaker Sheldon Silver, this year's income-tax hike made the state's revenue stream even more unstable, volatile and unsustainable -- without even taking into account the dampening impact that higher taxes will have on New York's economic-recovery prospects.

Under the circumstances, Paterson's Division of the Budget can hardly be blamed for missing its revenue target. The risk is that it's still guessing too high.