New York Finds High Taxes Send State's Wealthy Fleeing
By STEPHEN MOORE
Posted 07:03 PM ET
If there is anything New York doesn't need it's more reasons for Empire State residents to flee.
Over the last decade (2001-11) New York's population fell by 1.6 million. Many disgruntled New Yorkers said enough, packed up and left the state. This was a larger population drain than suffered by any other state. Congratulations.
That's why Democratic Gov. Andrew Cuomo's declaration that "extreme conservatives ... have no place in the state of New York" was so dumbfounding. Is it just me or does it seem like only yesterday that "progressives" like Mr. Cuomo were lecturing us about embracing "diversity"?
As they say in the Big Apple, fuggedaboutit.
This is a state with an unapologetic liberal political culture in Albany — where even the Republicans tend to lean left.
New Yorkers with conservative views of any stripe can be forgiven if they feel increasingly unwelcome. It's a place where abortion and gay marriage are legal and fracking, drinking supersized soft drinks and making a lot of money are viewed as heinous crimes.
But unquestionably it's the economics that drives the tax base out of the state at such a record clip.
New York City's income-tax rate of more than 12.5% is at or near the highest in the nation, and both the state and city are supremely reliant on the rich to pay the tax bill to finance the Cuomo-De Blasio "spread the wealth" agenda.
For example, IRS and state tax data indicate that New York state and city both collect more than 40% of their income taxes from those evil one-percenters. It's a pretty good bet that not all those business owners who find themselves in New York's highest income-tax bracket are culturally left. Some of them may even be pro-life.
And most of them, despite a New York Times story last weekend about a rich New Yorker who is feeling overwhelmed with guilt over all the money he has, aren't too eager to pay even more taxes for a state that is notorious for providing some of America's very worst public services — e.g., the inner-city schools in the Bronx.
To appreciate the severity of the brain and money drains from New York, I examined IRS tax return data from 1993 to 2010 on tax filers who move into each state and filers who move out.Over the entire period New York lost a net of almost $80 billion of adjusted gross income. The states are in a race for capital and businesses and jobs, and New York is the big loser — year after year after year.
New York politicians have long pretended that state taxes don't really influence decisions about where people locate their families and their businesses. But now even the economic development experts in Albany really believe that.
The Empire State is engaged in a $140 million dollar advertising campaign — "New York Open for Business" — which tries to entice startup companies to locate inside the state's borders with sales and property tax breaks.
But if tax breaks offer companies an incentive to enter a state, it should be self-evident that having one of the highest business tax burdens in the nation is an invitation to leave.The Cuomo administration says it wants to "level the playing field" with other states, which is precisely the right goal. But that's going to take more than a glitzy Madison Avenue PR campaign.
The state ranks in the bottom five of nearly every independent rating of business friendliness — from the Tax Foundation's to the American Legislative Exchange Council's. "The taxes and regulations smother New York businesses," says ALEC economist Jonathan Williams.
So there are already a multitude of reasons for people to leave New York, and Mr. Cuomo has just added yet another by describing cultural conservatives he disagrees with as close-minded bigots.
That's not embracing diversity, it's embracing stupidity.
• Moore is chief economist at the Heritage Foundation and a member of IBD's reconstituted Brain Trust.