Don't rule out a tax on the rich
Note: NYPAN supports legislators sponsoring BOTH the Stock Transfer Tax AND the Invest in Our New York Wall Street Tax
THE ISSUE: New York state faces multi-billion-dollar deficits for years to come.
THE STAKES: The solutions must outlast any temporary federal rescue aid.
By Gov. Andrew Cuomo’s estimate, New York faces a $15 billion budget shortfall. So why is the state so hesitant to look for revenue where it obviously is: in a booming stock market and the growing incomes of the rich?
We’re well aware of the arguments against this: The rich will flee, the stock markets, too. But you have to ask this, then: They’ll gladly stay in a state with diminished public services, struggling schools, rising local taxes and declining real estate values that austerity would bring?
It’s a weak argument that’s even less convincing against hard data. A 2016 study by Stanford University and U.S. Treasury Department researchers, using 13 years of tax records, found that top income earners are less transitory than the general population. A tiny few move for tax reasons, but the rate is on “the margins of statistical and socioeconomic significance,” the study concluded.
Of course, that doesn’t stop opponents of more progressive tax policy from blowing the occasional departure of a wealthy individual out of proportion. New York may have a population problem, but it isn’t because rich people are leaving the state where they’ve built their fortunes, homes and social networks.
Such findings are important in the context of the financial dilemma New York faces amid declines in revenue brought on by the COVID-19 pandemic and the slowdown across the economy. A hard look at the numbers suggests New York’s shortfall may not be as grim as Mr. Cuomo paints, but there’s no doubt a huge gap.
If the federal government doesn’t provide enough aid, the governor says, the state would have to take dramatic steps, including cuts to school aid, Medicaid, and other programs across the board. Reluctantly, Mr. Cuomo is now saying the state would have to look at raising taxes on incomes above $5 million.
The federal government should come through for New York and other states, certainly. But if it doesn’t, why target education and health care to close the budget gap? Mr. Cuomo has other options, notably the small transfer tax on stock transactions that has been on the books for over a century, but that hasn’t been collected since 1981. It could raise as much as $13 billion a year. Lawmakers are also looking at taxes on stock buybacks, luxury real estate and big corporate landlords.
No tax hikes are popular. But polls suggest the vast majority of New Yorkers recognize the fix the state is in and favor raising taxes on those who can afford it to get us through the crisis. If this pandemic has taught us one thing about government, it’s that a crisis like this is exactly when we need it to be well funded in order to deliver services and programs that sick and struggling people and businesses need.
And the fact is, taxes on the rich were far higher, and prosperity more broadly shared, before bogus trickle-down theory caught on in the 1980s.
Forget the myth of millionaire refugees. A state that can’t help its residents get through a time like this would be a place no one would want to live — poor, rich or in between.