Progressive Battle Cry: Tax the Rich! Tax the Rich! How's it Working Out?

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New York's projected income tax is $2.3 billion short of estimates. Governor Cuomo cited a need for more taxes.

Tax the rich, tax the rich, tax the rich. We did that. God forbid the rich leave,” said New York Governor Cuomo. Well they did leave and his solution, of course, is to raise taxes.

Please consider Andrew Cuomo’s Tax Epiphany

New York Gov. Andrew Cuomo was on the road to Albany when a light flashed before him. Lo, said a voice from the light, progressive taxes are driving out high earners and damaging the state budget.

Some miracle like that must have happened because on Monday Mr. Cuomo awakened from his first eight years as Governor and according to the Buffalo News declared, “Tax the rich, tax the rich, tax the rich. We did that. God forbid the rich leave.”

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.

The top 1% of New York taxpayers pay 46% of state income taxes. Revenues vacillate with capital gains—a problem that is compounded in New York because bonuses in the finance industry are often tied to trading revenue. Markets were especially volatile during the last quarter amid uncertainty about trade and interest rates.

The bigger problem seems to be geographic tax arbitrage. Mr. Cuomo notes in a PowerPoint presentation that “anecdotal evidence suggests that high income taxpayers are considering changing their residence and that financial industry firms are looking at real estate outside of New York.” While the Governor blames the GOP tax reform, high earners have been decamping for years, as E.J. McMahon of the Empire Center has chronicled.

According to IRS data we’ve examined, New York state lost $8.4 billion in income to other states in 2016 (the latest available data), up from $4.6 billion annually on average during the prior four years. Florida raked in the most New York wealth. Mr. Cuomo says that “a taxpayer in Florida would see no increase, or a decrease” under the GOP tax reform and “Florida also has no estate tax.” New York’s 16% estate tax hits assets over $10.1 million.

During his 2010 campaign, Mr. Cuomo promised to let New York’s tax surcharge on millionaires expire. But he has extended it again and again and now wants to renew it through 2024 because he says the state needs the money. Meantime, he warns that a wealth exodus could force spending cuts for education and higher taxes on middle-income earners.

Sadistic Maneuvers

Cuomo blame the Trump tax cut for this. “It literally restructured the economy to help red states at the cost of blue states,” he groused. “It was a diabolical, political maneuver.

Excuse me for pointing out the latest data on moving is from 2016 and that's when the wealthy started leaving in droves. Keep the 16% estate tax and more will leave.

But Cuomo wants to keep it because they "need the money".

Moody's Warns Illinois About Tax Hikes

Illinois is in the same situation just as Moody’s Warns Illinois Governor: New Taxes Might Make Illinois Residents Flee.

So, go ahead and tax the rich. Then keep doing it until there are no rich left to tax.

Mike "Mish" Shedlock

Comments
No. 1-10
Zardoz
Zardoz

I don't see anybody in any position of power saying ANYTHING about spending any less. We can't borrow any faster or the economy will go "BANG! kerwhacketawhacketwackte...". We are approaching the point where revenue will be completely consumed by interest costs. Taxes have to go up. We can't just put The Great Wall of Trump on the Visa.

I'm not rich. I will never be rich. Tax rich people more. I'm fine with that. Probably won't stop the ultimate collapse of our governoeconomic system, but it might prop it up for a while, and if I'm going to have to live through armageddon, I would prefer to do it later than sooner.

Spending reductions aren't on any table. Deficit? Deficits don't matter!

If you're a rich person, and you're reading this, I know this would suck for you for you, but you will be ok. Your family will get medical care. You will have a house to live in, and cars to drive. You will go on vacations to foreign countries. You will be ok.

If I were rich, I would probably feel as you do. But I'm not. The vast, vast majority of us are not, and we aren't feeling like we'd be ok. It's a bit of a scramble getting medical care, a house, and a car... and vacations are few and far between. Having a couple hundred a month taken a way would make it more of a scramble.

Nothing personal.

RonJ
RonJ

de Blasio said the money was in the wrong hands. The rich agree and are leaving New York, so de Blasio can't put it in the wrong hands- his.

Cuomo blame the Trump tax cut for this. “It literally restructured the economy to help red states at the cost of blue states,” he groused. “It was a diabolical, political maneuver.”

Actually, what Cuomo has done is a diabolical political maneuver. "New York state lost $8.4 billion in income to other states in 2016..." Trump wasn't even President, then. Cuomo has no one to blame but himself and the democrat controlled state legislature.

Blacklisted
Blacklisted

Our self-interested and short-sighted career politicians actual suffer from bigger flaws - little or no practical experience and ignorance of history. History is very clear where the black hole of govt largess ends. States like IL, NJ, CT, CA, and KY are just the tip of the debt-berg. Anyone that steps back and looks at the trend and cycles should clearly see that the US is in the process of handing over the financial capital to China. In another 12 years the table should be fully set for the transition to begin. Who will ever run for office to take on the establishment after witnessing what they continue to do to Trump?

Carl_R
Carl_R

When it comes to taxes, there are two very important rules. The first is that you should tax what you want less of, because you will get less. Want less people to smoke, tax cigarettes. Want people to work less hard, or high income people to leave, tax income. Want people to spend less, tax sales. That's why I favor a minimal income tax, and instead a consumption tax, one that is skewed to luxury goods, and which excludes basic necessities. People being productive is a good thing. People engaging is excess consumption is less useful to the economy.

The second important thing is that a tax system can only succeed if it is viewed as "fair". If people view it as fair, they will continue to live normally, and pay the tax. If they view it as unfair, rather than focusing on being more productive, they will focus on avoiding it.

ReadyKilowatt
ReadyKilowatt

Unless you're chasing women there's little reason to live in a city. Western New York is pretty, but there are a lot of pretty places in the world. Many of them don't have lake effect snow either. New York City is full of people who choose to live there (mostly to chase women), but much like living in a ski town eventually the shiny wears off and all the systemic problems come to the surface. When you're the 40 year old man at the nightclub it isn't fun anymore, just loud and shallow. So you either leave or start taking a lot of drugs while you wait for the divorces to begin.