The economic outlook in New York (both the state and the city) has been very depressing in recent years.
- New York is ranked #50 in the Economic Freedom of North America.
- New York is ranked #48 in the State Business Tax Climate Index.
- New York is ranked #50 in the Freedom in the 50 States.
- New York is next-to-last in measures of inbound migration.
- New York is ranked #50 in the State Soft Tyranny Index.
That’s a very depressing list. New York’s low rankings are rivaled only by a few other outlier states such as California and New Jersey.
But maybe a turnaround is possible.
There are two recent signs of rationality, one in New York City and one in Albany (the state’s capital).
Let’s start with this tweet from Phil Kerpen, which features some comments from Mayor Adams of New York City.
Remarkably, the Mayor understands it is not a good idea if the geese with the golden eggs fly away.
"To continually attack high income earners when 51% of our taxes are paid by 2% of New Yorkers — this blows my mind when I hear people say 'so what if they leave.' No you leave! I want my high income earners right here in this city!" pic.twitter.com/iBONQoNZI4
— Phil Kerpen (@kerpen) December 15, 2022
I don’t know if the Mayor’s comments will actually translate into better policy, but it certainly seems like he has a better understanding of reality than his predecessor.
Now let’s shift to the state level.
The Wall Street Journal opines about a potential outbreak of rationality by the state’s governor.
’Tis the season for epiphanies, and what do you know? It’s finally dawning on some New York Democrats that the state’s steep income tax rates are driving away top earners who fund essential public services. …miracles of miracles, Gov. Kathy Hochul last week ruled out tax increases and said she planned to hold the line on spending next year. “I don’t believe that raising taxes…makes sense,” she said. …A New York City Independent Budget Office report this month showed that the number of taxpayers who earned between $1 million and $5 million plunged 11% in 2020 from the prior year. …The culprits are high taxes and Covid lockdowns. According to IRS data, New York County lost $14.5 billion in adjusted gross income from out-migration between 2019 and 2020. And this was before Democrats in Albany last spring raised income taxes on individuals making more than $1 million, jacking up the combined state and New York City top rate to 14.8% from 12.7%. Even New York Comptroller Thomas DiNapoli, who is no moderate, told Bloomberg News last week that the exodus of taxpayers at the upper end “should be a concern for everybody.” He added that “we might be getting near that tipping point where we do make it economically unsustainable for enough of those folks to stay here.”
For what it’s worth, I think New York already passed the tipping point. Thousand and thousands of well-to-do taxpayers have already escaped and moved to zero-income-tax Florida.
That means New York’s parasitical politicians have lost billions and billions of tax revenue. And I suspect that’s why we are seeing some semi-sensible comments from the Mayor and the Governor.
Let’s close with a depressing observation. The reason the comments from the Mayor and Governor are “semi-sensible” is that they are only saying there should be no more tax increases.
That’s not the same as saying that there should be tax cuts. Or TABOR-style spending caps.
In other words, the “good news” from New York is that politicians want to freeze the current (very bad) policy in place. That’s better than galloping faster in the wrong direction, of course, but a far cry from what’s needed.
Especially when many other states are seizing opportunities to become more competitive.
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Image credit: Fred Hsu | CC BY-SA 4.0.
