Over tax the rich, and the rich leave.
New York collected $2.3-B less income-tax revenue than predicted for December and January, a development that Governor Andrew Cuomo blamed on wealthy residents leaving for 2nd homes in Florida and other states that received more favorable treatment in the tax law enacted by President Donald Trump and the Republican Congress.
The shortfall will require a new look at the $175-B budget Governor Cuomo submitted to the legislature last month. If the trend continues, the Governor said it would affect spending on high-expense items such as health, education, infrastructure and a planned middle-class tax cut.
“There is no doubt that the budget we put forward is not supported by the revenue,” the Democratic Governor said during a news conference in Albany Monday.
“If even a small number of high-income taxpayers leave, it has a great effect on this tax base. You are relying on a very small number of people for the vast amount of your tax dollars.”
The Governor placed the blame on President Trump and the Republican-dominated Congress of Y 2017, which enacted a tax plan limiting federal deductions on real estate and other local taxes.
“It was politically diabolical and also highly effective,” Governor Cuomo said. “And if your goal is to help Republican states and hurt Democratic states this is the way to do it.”
He vowed to pursue legal challenges against the tax plan, citing its unequal impact, increasing tax liability for residents of New York, California, New Jersey and Connecticut, while reducing it in southern states such as Florida, where many of New York’s wealthiest residents own 2nd homes.
“They are investors, they have accountants, they are making informed decisions,” Governor Cuomo said. “This is going to be the tipping point and people will now be making a geographical change.”
Andrew Cuomo, a Democrat, ridiculed members of his political party who are calling for higher state taxes on the rich, saying the Top 1% of earners already account for about 46% of state income-tax revenue.
“Tax the rich, tax the rich, tax the rich, and then the rich leave. And then what do you do?” he asked. “It would be the absolute worst thing to do right now. At the same time, you do not have the ability to reduce taxes on the rich because that would just expand the shortfall.”