Wednesday, February 6, 2019

Taxing the Rich Busts New York's Budget

According to the Wall Street Journal, New York Governor Andrew Cuomo has had a tax epiphany. He has discovered that when you raise taxes for New Yorkers they tend to flee the state… for warmer low tax states like Florida.

In his words:

Tax the rich, tax the rich, tax the rich. We did that. God forbid the rich leave.

As it happens the rich are abandoning New York State… at least for six months and a day… the amount of time required to longer be a state resident. What happens then is simple:  you see reduced revenues entering the state’s fiscal coffers and you blow a massive hole in the state budget.

Mr. Cuomo delivered this testimony from the Book of Tax Revelation while announcing Monday that New York state’s income tax revenue over the last two months was $2.3 billion below projections. “That’s as serious as a heart attack,” he said.

Of course, one reason why this is happening is: tax reform. When Congress passed a tax reform bill, it reduced the deductibility of state and local taxes. It also reduced the deductibility of mortgage interest. Savvy New Yorkers saw the writing on the wall and bought real estate in Miami.

Mr. Cuomo blamed in particular the 2017 federal tax reform, which limited the deductibility of state and local taxes to $10,000. “It literally restructured the economy to help red states at the cost of blue states,” he groused. “It was a diabolical, political maneuver.”

He would know about tax sadism. New York City’s combined state and local top rate of 12.7% hits taxpayers earning more than $1 million and is the second highest in the country after California. The deduction limit raised New York’s top rate by an effective 5%, though this was partially offset by the tax reform’s 2.6 percentage-point reduction in the federal top rate.

But, the Journal continues, taxes on wealthy New Yorkers also rose during the Obama years:

The reality is that rates on wealthy New Yorkers rose more during the Obama years due to the 0.9% Medicare surcharge on investment income and expiration of the Bush tax cuts for high earners. But Mr. Cuomo is right that tax reform has made New York less economically competitive by fully exposing high earners to its progressive taxes.

Cuomo has noted that it’s not just rich New Yorkers. Financial service firms are also considering a move away from the Big Apple… because it has become too damned expensive. Aside from the tax issue, the cost of living in New York easily outpaces that of all other locales. And, for the city and state taxes people pay the public transportation system, especially the subway, is a nightmare.

Of course, Cuomo also landed the Amazon account... so to speak. He persuaded Amazon to open a headquarters in Long Island City. Given that New York's politicians are imbeciles, a group of them have gotten together to try to block the Amazon deal. Somehow they believe that their neo-socialism will make New York more attractive for business. Keep in mind these are the politicians who are cheering their imbecile-in-chief, Alexandria Ocasio-Cortez.

Anyway, now that the state is receiving less tax revenue, it will be cutting public services even more. Less money for public transportation. Less money for education. High taxes, soaking the rich, seems not to be very good policy.


Anonymous said...

There is little that is done in NYC that cannot be done better someplace else. As I have stated before, "The rich are NOT stupid!"
Given that we have helped to create a global economy, it becomes rather easy to accomplish one's career in another part of the global economy. Trump spend time getting a significant amount of money to return back to the US. It can easily go back the other direction. It does seem that the left is doing its magic to cause it to happen.
Ah, the better to make us all slaves to the state. The question is how envious, and unthinking, can people become in their desire to steal other people's hard work and money.
One only has to look at the supposed democrats in Congress to see that the lust for power overrides everything. Ideas and concepts that they professed in the not so distant past now appear to have lost validity because of their hatred of all things Trump.
A masterfully crafted SOTU speech last night. So many landmines laid and traps set.

Anonymous said...

Now where could we have learned that lesson before we made the same mistake? Oh yeah, right next door in Connecticut!

UbuMaccabee said...

Echoing Lenin after the famine of 1891: What is bad for New York is good for America. Same goes for the other insane leftist paradise, California. They can both become object lessons in what not to do, warnings for the idiots who do not understand that ideas have consequences. Besides, I miss being able to buy crack cocaine openly in Washington Square Park and shitting wherever I please; it reminds me of when my people lived in caves.

I spend a lot of time in Brazil, and the definitely got the message from Venezuela and, to a lesser extent, Argentina. They looked at Venezuela, and looked at Lula and Dilma, and looked again at Venezuela, and said, "Fuck that!"

BTW, all those New Yorkers who live 51% of the time in Florida all vote for leftists. Hard to fathom, but they do. That's why we don't want any refugees down here after the deluge; we simply cannot trust the political instincts of Gothamites. Leftism is like a bacillus and Dixie needs to quarantine newcomers before allowing them entry.

trigger warning said...

I'm waiting for the obligatory "We'll have to cut fire, police, and street repair budgets!!!" one hears after every reduction in tax revenue or foiled tax hike.

It's never "We'll have to cut the Sidewalk Arts budget, cancel Kindergarten Transgender Awareness Workshops, and eliminate the Diversity Commission's Annual Mogadishu Dumpsterfire Festival."

UbuMaccabee said...

Trigger, you fully understand the perversity of leftist government. Spot on. Cut essential services people want to incur as much suffering as possible, but never chop the indefensible spending on programs everyone would love to see gone. That's the game plan and it works every time because the media lies and lies and lies to support this plan.

Sam L. said...

I have read comments elsewhere from Floridians, complaining of New Yorkers moving there and continuing to vote the way they did in NY, to the detriment of said Floridians. Like UbuMac, above.

"Anonymous said...
There is little that is done in NYC that cannot be done better someplace else. As I have stated before, "The rich are NOT stupid!" But they are, or seem to be, enthralled with the society and the cultural opportunities there.