To Stave Off New York’s Death Spiral, Cut Taxes

Here’s a crazy idea: New York officials should cut taxes.Yes, the very idea would offend progressives in charge of our city and our state. But, it may be the only way New York escapes its ongoing death spiral. If high-earning New Yorkers continue to leave, the city’s prospects will get steadily worse. As residents flee, our streets become more dangerous, local businesses fail and tax revenue drops. The state’s deficit is blowing up, with the budget gap through 2027 now forecast at a staggering $36.4 billion. Cue the inevitable calls for higher taxes on the wealthy and businesses which, without doubt, will only drive more high earners to move to more welcoming states. There is another path: bring people back to New York.Here’s a heads-up for Governor Hochul and Mayor Adams: New Yorkers, and especially wealthy New Yorkers, do not want to leave the Big Apple. They are being driven out by onerous taxes, an ongoing process that was accelerated by the pandemic and the emergence of remote work. Many would, if the tax burden were lifted, come back in a heartbeat.As the Palm Beach crowd returned from their requisite 180 days in exile, nearly everyone I visited with was overjoyed at being back in New York. Why? Because these are the folks who feast on theater, dance, the Philharmonic and all the other cultural treasures that the Big Apple offers. They are the first through the doors at a new exhibition at the Metropolitan Museum or Museum of Modern Art; they file respectfully into the 92nd Street Y to attend lectures on disinformation or chats with Chelsea Clinton. New York’s liberal elites miss New York. And, they are restless in Palm Beach. That Upper East Sider mecca is beautiful and serene; there are no homeless people heckling you for spare change or empty storefronts reminding you of the Great Manhattan Exodus. It is sunny, clean and cheerful. There are great restaurants, including a growing number of iconic Manhattan watering holes like La Goulue, Bilboquet, and Swifty’s that have migrated south with their favored clientele.Yet, for most displaced New Yorkers, playing golf does not measure up to the stimulating (and often exasperating) smorgasbord of life in the Big Apple. People tell me they are dying to come home, if only the tax burden didn’t make it so expensive to do so.But what about New York’s budget? Wouldn’t cutting taxes just make things worse? Here’s an inconvenient fact for the “tax the rich” crowd: lowering tax rates almost always raises revenues.For all the left-wing squawking about how Trump’s 2017 tax cuts destroyed our country’s finances and blew up the federal deficit, the reality is that federal receipts grew in the years after passage of the 2017 Tax Cuts and Jobs Act. Personal income and payroll taxes rose every year during the Trump presidency except for 2020 when the economy was torpedoed by Covid. An analysis by CATO shows that income tax revenue in 2022 “was 32 percent higher than CBO projected following the 2017 tax cuts, in April 2018. Similarly, payroll and corporate tax revenue outpaced the estimate by 6 percent and 20 percent, respectively.”The Trump tax cuts are not unique. JFK’s Revenue Act of 1964 reduced the top personal income tax rate to 70 percent from 91 percent and the top corporate tax rate to 48 percent from 52 percent and also boosted revenues. Nay-sayers in President Kennedy’s Democratic Party and economists expected the country to suffer a monster (cumulative $32 billion) loss of revenue through 1966 but they were wrong; federal receipts grew by more than half from 1965 through 1970. President Reagan also stimulated the economy by letting people keep more of what they earn. In 1981, Reagan cut the top personal income tax rate to 50 percent from 70 percent. Once again, liberals predicted catastrophe, but once again these slow learners were wrong; federal receipts grew by 33 percent in real terms from 1983 through 1989. New York’s politicians have no excuse for stubbornly clinging to policies that are destroying our city and state. A new study shows that California and New York suffered the biggest tax revenue loss from migration of any states. New York lost a little less than $300 million from its yearly tax base because of out-migration. It’s no wonder; according to a different study, New York’s tax burden on individuals is the highest in the nation. Yet another survey concludes that states with the highest taxes lost nearly one in 100 residents in the single year between July 2021 and July 2022; those folks nearly all went to states with the lowest taxes.This is simple. Cut taxes and draw back people who actually want to live in New York. Yes, wealthy people would benefit. So what? Even a Democrat like Mr. Adams has acknowledged the city needs its high-income residents. Those are the folks that keep the lights on.

To Stave Off New York’s Death Spiral, Cut Taxes

To Stave Off New York’s Death Spiral, Cut Taxes

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