The problem with taxing the rich is that the rich don’t have to – and often won’t – stand for it. The poor and lower middle class are something of a captive audience. But the truly wealthy can afford to move wherever they like. That’s a tough lesson to learn for a “progressive” leader like New York Governor Kathy Hochul, but learn it she has. So far, though, it doesn’t seem she’s taking the lesson to heart. Rather than reimagining the tax structure in the Empire State, she’s begging the wealthy former residents – the very folks she told to “jump on a bus and head to Florida” just a few years ago – to come home so they can pay more in taxes.
Escape From New York
New York City Mayor Zohran Mamdani is currently trying to convince Governor Kathy Hochul to approve another 2% increase in income tax for anyone making $1 million a year or more. She’s balking, though, despite having previously been an advocate for higher taxes for the rich. But, you see, the rich are leaving New York, and the good governor is starting to feel it in the state coffers.
A report released last year showed New York lost $517.5 billion in resident incomes from 2013 to 2022. A look at the website for the New York State Department of Taxation and Finance shows things proceeded to get worse. Total tax revenue for the state dropped from 2022 to 2023, and again from 2023 to 2024, and it did so across all three tracked categories: personal income; corporate and business; and sales, excise, and use.
And that’s the problem with trying to more heavily tax the rich: They can afford to move to greener pastures – and often they do.
Taxes Upon Taxes
Never mind Mamdani’s proposal for a moment – New York already has some of the highest income taxes for high-income earners, and it’s worse in the city. Right now, the top-earning New Yorkers pay 10.9% personal income tax – second only to California’s 13.3%. But those living in the Big Apple have the city income tax as well – another 3.876% for anyone making more than $50,001 a year or $90,001 for married couples filing jointly. It puts another of the city’s nicknames in a new perspective; those numbers are certainly worth losing sleep over.
And that’s just the beginning of the tax hell that is the Empire State. There are MTA surcharges on C-corps in the 12-country region served by the Metropolitan Transportation Authority, which add another 30% surcharge on the company’s state franchise tax. There’s a tiered structure for businesses operating in NYC that enforces a fixed rate additional corporate tax based on total receipts, regardless of expenses and actual profits.
And to make matters worse, progressive leaders in the state are considering adding more – like a 1% surcharge on residential properties valued at $5 million or more, a tax on the value of billionaires’ assets even if they aren’t sold, and a 1% transfer tax on any real estate property transaction over $1 million. As of June 2024, an estimated 16% of New York homes were worth $1 million or more – and the number jumps to 30.5% in the NYC metropolitan area. Of course, these are all additional fees to be added to the already existing taxes.
Get Outta Here – No, Wait, Come Back!
Back in 2022, Kathy Hochul said at a rally for Rep. Pat Ryan, a moderate Democrat, that supporters of Donald Trump, Lee Zeldin, and then-Dutchess County Executive Marc Molinaro, who Trump appointed to the FTA, should “jump on a bus and head down to Florida where you belong, OK?” She added: “Get out of town. Because you do not represent our values. You are not New Yorkers.”
Evidently, many wealthy New Yorkers did as their governor suggested. And then she learned a simple mathematical fact that pretty much any American who isn’t a TDS-riddled progressive could have told her: You make more money collecting lower taxes from a lot of people than charging higher fees and ending up with no one to pay them.
At a Politico event this month, Hochul pointed out the issue and lamented the lack of “high-net-worth” people to fund the “generous social programs we want to have in our state.”
“There are some patriotic millionaires who stepped up,” she said. “OK, cut me the checks. If you want to be supportive – but maybe the first step should be go down to Palm Beach and see who you can bring back home, because our tax has been eroded.”
“I have to look at the fact that we are in competition with other states who have less of a tax burden on their corporations and their individuals,” she continued. Yet in classic leftist fashion, Hochul clearly recognizes the problem – that New York is harder on its wealthy than almost any other state in the Union – but takes home the wrong lesson.
Rather than adjust policy to better compete with those other states, she wants to drag those lucky ones who escaped right back into the trap. How does that conversation go? “Hey, would you please do the patriotic thing and come back to New York so you can pay more in taxes to fund our progressive programs on your dime?” Yeah, good luck with that.
