Rich Welsh| This week, the Internal Revenue Service (IRS) released more troubling data for New York, that shows even more high-earning taxpayers are moving out of the state for good. How would the IRS know this? Through tax filings, of course.
When following returns that were filed in 2019 and 2020, a pattern emerges showing that 479,826 people left the state of New York for another state or even another country in those years. Less than half that amount, 231,439 people moved into The Empire State, giving New York a net loss of 248,387 residents. The latter must be gluttons for punishment.
Here’s the thing. For decades progressive states like New York, California, Illinois and others had a special deal with the Democrats in Washington, DC, who allowed taxpayers in those states to write off their state and local taxes (SALT) from their federal income taxes. Why would they do that? States run by progressive Democrats make all kinds of eventually unsustainable promises of goodies that cost a lot of money. Progressives have no idea how to govern effectively, so they promise voters the world in return for keeping them in office by voting for them. One could call it a political quid pro quo.
Democrat leaders in progressive states know that rich people do not like to pay outrageously high taxes, especially when they’re not really getting much for them as the lower middle class and especially the poor make use of the progressive programs that cost so much. So the Democrats reached out to their brethren in DC and got them to allow federal tax write offs for their rich friends.
The problem for the rest of us is that the federal government is not going to stop spending outrageous sums of money just because rich liberals in blue states get to write off their state taxes from their federal returns. That means that the difference has to be made up by everybody else. What this means is that the Democrats, who are constantly telling us that the rich have to pay their fair share, have been forcing middle-class taxpayers to subsidize their rich residents at the federal level
When Donald Trump was president, he understood that the SALT writeoffs were unfair, and he ended the program. It was a lesson for progressive states that they had to learn to live with what they caused in their states.
Rich residents in New York started moving out to states with lower or even no state income tax. Many of New York’s rich moved down to Florida where individual income taxes do not exist and the standard of living is better in that crime is lower and it’s a much freer society than the prison colony New York has become.
Former Governor Andrew Cuomo once complained that rich people were leaving New York in droves because Trump removed the SALT tax deduction. The only reason Cuomo cared was because when rich people moved out of New York, they took their tax dollars with them. The IRS numbers reveal that the residents moving out created an economic downfall of over $16.5 billion in lost tax revenues.
New Jersey, oddly enough, benefitted from New Yorkers leaving. The Garden State had around 84,500 New Yorkers move to New Jersey, taking in about $5.3 billion in tax revenues. Since New Jersey is also a very progressive state, you have to factor in things like crime, cost of living, COVID mitigation abuse and others on top of the high cost of living in New York.
Over two years, nearly 72,000 New Yorkers escaped and went to the freedom of The Sunshine State, Florida, bringing with them $6.4 billion.
Think about how the governor of New York, first Andrew Cuomo and now Kathy Hochul (not elected), and the mayor of New York City, first Bill de Blasio and now Eric Adams, treated their own people during the COVID-19 pandemic. They shut down businesses, many going bankrupt and many never to return. They locked people down in their homes, made children learn virtually at home and then by wearing a mask for 8 hours a day in classrooms.
Cuomo killed thousands of elderly New Yorkers by forcing COVID-infected patients into nursing homes without a plan to protect them. He lied about it, tried to blame Trump, and never took responsibility for the deaths.
NYC decided to end bail for many crimes and call it “bail reform.” Crime skyrocketed and so did government tyranny. You’d have to be a fool to stay there.
For those and many other progressive reasons, New York suffered the worst losses in income than any other state, with $19.5 billion showing a 2.5% decline in adjusted gross income, according to an analysis by independent nonprofit research company Wirepoints. Their analysis also shows that New York has lost $1 trillion in income because of people moving out of the state since 2000.
“The problem with chronic outflows, like in the case of New York, is that one year’s losses don’t only affect the tax base the year they leave, but they also hurt all subsequent years,” Wirepoints noted. “The losses pile up on top of each other, year after year.”
Democrats in progressive states have already appealed to the Democrats in DC to bring back the SALT tax deduction, which would just start the whole process over again by kicking the can down the road. It’s like they never learn.
