It’s no secret that New York is struggling today. Our state had the largest population decline in the nation last year. Since 2010, a staggering one million residents have loaded up the moving vans, waved goodbye and relocated to states that offer better job opportunities and lower taxes.
The politicians who helped get New York into this mess want you to believe that more of the same old failed policies will fix the problem. We should know better.
The Tax Foundation rates New York as #1 in state-local tax burden and 48th in business tax climate. These high-tax policies didn’t happen overnight. They’re the product of years of mismanagement and an unwillingness to tame runaway costs. And they’re even becoming the brunt of jokes, with Florida Senator Rick Scott taking to the pages of the Wall Street Journal to mock New York’s tax policies for driving people to his state.
With such high taxes, you might expect New York to be running a budget surplus. In reality, the overspending and dwindling population has led to a budget that’s $3 billion in the red, proof that high taxes don’t mean balanced budgets.
Unsurprisingly, politicians in Albany are at it again, proposing yet more ill-conceived taxes that may sound good in a newspaper headline, but would simply perpetuate the problem.
State Senator Brad Hoylman, an outspoken liberal who has made chasing anti-Trump press coverage his hallmark, is sponsoring a bill that would impose a punitive “pied-a-terre” real estate tax on nonresident owners of New York City condos, co-ops and homes worth more than $5 million, supposedly to help finance subway construction.
This may sound good to some, as it jibes with the “tax the rich” envy dominating New York City’s politics these days. The reality is these taxes will do little for the bottom line.
New York already taxes the wealthy, and there’s not much more money the state can wring out until the stream of high-earners leaving becomes a flood. The state is extending the supposedly “temporary” millionaires tax, and is reportedly in the final stages of approving a “congestion pricing” scheme to toll drivers in Manhattan, another punch in the gut to hard working middle-class outer-borough and suburban residents. Hoylman’s tax, on top of these, would directly encourage more residents to flee, as it could punish a New Yorker who has, for instance, an apartment in the city and a home in Florida. You can imagine which state would win.
Second, Hoylman’s tax would damage the housing market. A Wall Street Journal analysis found that the bill would cause a “dramatic drop in value” in the higher end of NYC’s real estate market, a segment that is already facing headwinds. Falling values would drive down assessments and property tax revenue, forcing them to raise taxes even higher while building less – and much needed – affordable housing. It would also decrease the pace of high-rise development, resulting in a loss of construction jobs, and hurt the real estate industry, building service workers, architects and engineers.
And as the Empire Center for Public Policy explains, Hoylman’s tax is also a poor source of cash for subway repairs, which requires long-term, stable revenue sources to plan for years and decades into the future. A tax that varies on the whims of high-end real estate buyers is just not a good fit.
Senator Hoylman was an early supporter of bringing Amazon to New York City, but now that the far-left has successfully killed that deal, along with 25,000 jobs and $27 billion in tax revenue, he is working overtime to re-establish his liberal bona-fides through his real estate tax. That doesn’t make the tax a good idea.
New York is falling apart. The MTA is a disaster. Our infrastructure in crumbling. Too many of our schools are mediocre, at best. Government can’t even perform the most basic tasks, and yet lusts and demands more of our hard-earned money. Albany politicians should think about how to improve the tax environment, not make it worse. Their top priority needs to be keeping and growing the state’s population. Until they take this lesson to heart, New York’s economic woes will only continue to grow.