I live in Connecticut and the taxes here are high. For those with middle income or higher, the income tax is just under 7% and there are no real deductions. Our property taxes are also high. Even so, the tax burden is still much lower than in neighboring New York. And New York seems to be working to raise its taxes even higher. Couple those high taxes in New York with the loss of the deduction for state and local taxation over $10,000 per year, and you get a recipe for pushing wealthy individuals out of New York.
The force driving high income earners out of New York seems to be working. So far in 2019, the state of NY has reported that its revenue from the income tax is coming in at about half a billion dollars below estimates. This is not the federal budget where half a billion dollars is a rounding error. In NY, the budget has to be balanced according to the law. The state uses some accounting gimmicks to achieve that balance, but a shortfall of half a billion dollars cannot be ignored.
So what is NY's response to this? Governor Cuomo just proposed extending an "emergency" tax on high income people which has been in place for the last ten years. It seems that emergencies never end in the Empire State. This emergency surtax on high income individuals guarantees that New York taxation on the highest incomes will remain much higher than the rates in neighboring states, indeed higher than anywhere but in California. The tax was supposed to expire this year.
Here's a key statistic that one needs to keep in mind. In New York, the top 1% of those paying income taxes pay over 40% of the total for the state. Many of those high earners work on Wall Street and are forced to stay in New York, at least for now. Many others, however, live in New York by choice. They could easily leave. For example, someone with an income of ten million dollars each year could likely save a million dollars in taxes by moving to Florida. Think for a moment what a million dollars a year could get you in some very ritzy area of the Sunshine state. Sure, if you earn ten million a year, you can afford the taxes in New York, but how many people would still look at those taxes as something that could easily be avoided by moving? It would not take many people moving for New York to suffer a really big hit.
The force driving high income earners out of New York seems to be working. So far in 2019, the state of NY has reported that its revenue from the income tax is coming in at about half a billion dollars below estimates. This is not the federal budget where half a billion dollars is a rounding error. In NY, the budget has to be balanced according to the law. The state uses some accounting gimmicks to achieve that balance, but a shortfall of half a billion dollars cannot be ignored.
So what is NY's response to this? Governor Cuomo just proposed extending an "emergency" tax on high income people which has been in place for the last ten years. It seems that emergencies never end in the Empire State. This emergency surtax on high income individuals guarantees that New York taxation on the highest incomes will remain much higher than the rates in neighboring states, indeed higher than anywhere but in California. The tax was supposed to expire this year.
Here's a key statistic that one needs to keep in mind. In New York, the top 1% of those paying income taxes pay over 40% of the total for the state. Many of those high earners work on Wall Street and are forced to stay in New York, at least for now. Many others, however, live in New York by choice. They could easily leave. For example, someone with an income of ten million dollars each year could likely save a million dollars in taxes by moving to Florida. Think for a moment what a million dollars a year could get you in some very ritzy area of the Sunshine state. Sure, if you earn ten million a year, you can afford the taxes in New York, but how many people would still look at those taxes as something that could easily be avoided by moving? It would not take many people moving for New York to suffer a really big hit.
No comments:
Post a Comment