For a moment there I thought that Elizabeth Warren had suddenly replaced Andrew Cuomo as the Governor of New York. The state legislature today announced that they will be introducing legislation to implement a series of massive tax increases primarily targeting the wealthiest New Yorkers. As the New York Post points out today, the legislature is doing this despite the fact that the state just received a fresh injection of $100 billion in federal aid. They apparently think they’re going to need the extra $7 billion these taxes will generate, however, because the government’s current budget plan calls for them to actually increase spending next year by 22.6%, just as their revenue calls for some belt-tightening. Let’s see if you can guess what’s going to happen next.
New York wants to sock it to Wall Street and the wealthy.
Both houses of the state legislature have proposed budgets that include nearly $7 billion in new and increased taxes on businesses and the rich.
The tax increases come despite a $100 billion avalanche of fresh federal aid to New York, including $12.6 billion directly to state government coffers.
Assembly leaders crowed in a press release Sunday that state lawmakers are proposing a $208.3 billion budget for the next fiscal year.
Let’s take a brief look at some of the details in this cash grab before addressing the obvious questions and likely consequences.
First, for anyone earning more than one million dollars, their state income tax rate will go up by nearly fifty percent to 11.85 percent. Two new tax brackets will be added. One will hit people earning between 5 and 25 million with an additional 10.85% tax bite. Those unfortunate enough to earn more than 25 million will take an additional hit of 11.85%.
Anyone earning more than one million dollars will also be hit with a new 1% capital gains tax. How a tax based on your income is going to be defined as a “capital gains” tax is not explained. Also, anyone with a second home in New York City will be tagged with a “special” progressive tax, expected to raise hundreds of millions of dollars. The state will also jack up the death tax (I’m sorry… “estate tax”) from 16% to 20%. And finally, there’s a recording tax on “mezzanine debt and preferred equity investments,” custom-tailored for larger Wall Street investors.
It would be interesting to see if some of these taxes, specifically the ones targeting people based on their total assets and real estate rather than their income, are actually constitutional. It’s a question that many people have about Elizabeth Warren’s so-called “wealth tax” and it’s hardly a settled matter.
As to what happens if these measures go into place, that much should be obvious. The state – and New York City in particular – has already been witnessing an exodus, particularly among the higher earners. The two most commonly cited reasons are the high taxes and cost of living, but the pandemic in the crowded metropolitan area has added to it as well. When you add in the rising crime rates and decrease in police protection, there are more than a few good reasons to “escape from New York.” Any further significant flight by the wealthy would be “devastating” to the state and municipal budgets according to analysts at Bloomberg.
What do you think is going to happen if Albany suddenly tells all of those people that they will be shouldering an even larger portion of the burden by a vast degree? The extra money they’re looking to raise isn’t going toward driving down crime or rebuilding the police force. It’s going to be targeted toward paying off the rent of delinquent renters and other “social justice” concerns. Most of the people they are targeting are going to be packing their things and heading to Florida or any other areas that won’t seek to rob them to that extent and would certainly appreciate an influx of wealthy people who will invest in businesses and create jobs.
Good luck with this plan, guys. It’s sheer genius. Of course, a “wealth” tax isn’t going to fix your massive budget problems if the wealthy all leave the state.