NEOAVATARA

New York, New York

http://online.wsj.com/article/SB123940286075109617.html

http://news.cnet.com/8301-13578_3-10220649-38.html?tag=mncol

During a time when the economy is in recession, virtually everyone agrees that tax increases are not a good idea.

Everyone, that is, but liberals who lead our biggest states.

That was one of the arguments for Obama’s stimulus package, in fact; let the federal government subsidize states in order to prevent tax increases.  However, the opposite has occurred.  These states are pocketing the stimulus dollars, and then taxing their populace on top of that.  New York, California, New Jersey, Illinois…just a few states that will be trying to increase taxes this year.

New York, of course, leads the way.  In New York, Assembly Speaker (and de facto Governor) Sheldon Silver and other Democrats will impose a two percentage point “millionaire tax” on New Yorkers who earn more than $200,000 a year ($300,000 for couples). This will lift the top state tax rate to 8.97% and the New York City rate to 12.62%.  So if you live in New York City and make over $200,000 (which is commonplace in Manhattan, BTW), you are paying an approximate top taxable rate of 60%.  That is right, 6 -0 percent.

With the new taxes, Gov. Paterson assumes that there will be no change in the activity of those he is taxing.  How absurd.  What do you think is going to happen?  Many of those rich people will just simply move.  The rich are not burdened by localities, usually.  And, move to Delaware, no income taxes!  Or Florida, Arizona, Nevada, or many other states with lower income taxes.

The issue hit a zenith with Rush Limbaugh, of course.  Rush moved out of New York a decade ago, but apparently keep some offices there.  During hurricane season, he goes to New York to do his radio show instead of staying home in south Florida.  According to Limbaugh, he has been audited almost every year by the New York tax service since he left New York, and has to prove that he doesn’t live there any more.

After Paterson called for the higher income taxes, Rush said enough, and said he is likely to move all of his offices out of New York City, largely to avoid the tax implication.  When asked about it, David Paterson responded that if he knew that the taxes would get Rush to leave, he would have done it long ago.

Funny.  But also scary.  Why?  Because Paterson’s tax plan depends on people like Rush Limbaugh.  Take New York City, a city of 8,000,000 people.  Do you realize that 60% of taxes in the city are paid by a mere 40,000 rich people?  Now, imagine if even 10% of those people leave New York permanently.  That is not an unimaginable number.  Well, that means tax revenues would decrease approximately 6% annually…a huge loss.  Wonder if David Paterson is still laughing.

And Limbaugh isn’t the only personality that has suggested leaving the state.  Donald Trump, on Fox Business Channel, hinted he may be considering a similar move.  And I am sure there are many actors and actresses that call  New York home that will be reconsidering.

And the audacity of New York; they point to the disastrous New Jersey financial situation as their goal!  New York Democrats point to a Princeton study showing that those making over $500,000 increased by 60% from 2003-2006.  One problem: the same study shows over the same period the U.S. saw an increase of 76% in half-millionaire households. E.J. McMahon, a budget expert at the Manhattan Institute, calculates that New Jersey lost more than 4,000 high-income taxpayers after the tax increase.

What is even scarier for the state of New York is that their economic condition is dire, maybe more so than people understand.  New York state has lost more citizens in the last decade of any state, almost 2 million.  New York City has lost 75,000 since August.  People simply can’t afford to live there.  There is a reason why Michael Bloomberg, NYC mayor, is cutting thousands of jobs, and even threatening bankruptcy.  The American Legislative Exchange Council recently said New York had the worst economic outlook of all 50 states, including the disaster that is Michigan. And that analysis was done before these $4 billion in new taxes.

Now, New York is far from alone.  Many states are considering taxing internet sales in a bid to narrow their deficits.  Do we really want to increase sales taxes on businesses that are barely holding on to profits as it is?  This is illogical.

This is liberal tax policy at its best.  Paterson, who is now in serious risk of being challenged from within the Democratic Party, clearly is struggling.  He is not up to the job.  His poll numbers are hovering in the low 20%.  But this is total liberal idiocy.  They believe that by increasing taxes, that people will not change their behavior in response to the tax increase.  But people do respond.  And New York may be worse off for it.