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Will Rich Really Flee NY If Income Taxes Rise?
By
John Del Signore
Published Mar 19, 2009
Modified Mar 19, 2009
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By
John Del Signore
Published Mar 19, 2009
Modified Mar 19, 2009
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'Eek, don't raise taxes on the rich!' Bloomberg and other plutocrats warn, or else they'll defiantly tie their sweaters around their necks and move somewhere else, where the lower orders have a better appreciation for trickle-down economics. But according to a pretty thorough article in today's Times, there's actually scant evidence that an income tax hike on the wealthy will engender a Park Avenue strewn with tumbleweed. In fact, after 9/11, the state and the city imposed a temporary surcharge on incomes of more than $100,000, and a comptroller study suggests it had little impact on those who make over $250K.
Ah, but that was then, before the economic Armageddon. Elizabeth Lynam, a research director at the Citizens Budget Commission, tells the Times, "Things are much more cataclysmic." But Douglas Massey, a demographer at Princeton University, counters that any elites still managing to make bank will pose little flight risk: "In this time of upheaval, people that have an economic stake and have a job are probably going to stay because big incomes are so much harder to come by now."
Professor Massey recently published a study [pdf] examining the impact of New Jersey's 2.6% tax hike on the wealthy in 2004; he estimates that the increase cost New Jersey only 50 to 350 existing "half-millionaire" households—out of 44,000 such households in the Garden State. Sure, the rich folk who moved cost the state $38 million a year in revenue, but those who stayed have brought in some $895 million a year. And because New York is the capital of culture and so many other industries, it seems implausible that the rich will relocate en masse to places like South Dakota because of a little tax increase. No, they will stay. And we will eat them.
Even conservatives who oppose income tax hikes say the rich-flight argument is weak; Edmund J. McMahon, director of the Empire Center for New York State Policy, admits, "I kind of clench my teeth every time Paterson says people will leave. It is the selling point. It’s also a dumb point. Nobody says your wealthy enclaves will shrink dramatically. What they say is that your economy will suffer." Nevertheless, the state Senate doesn't have the votes to raise income taxes on the affluent. But it seems they do have the votes to raise payroll taxes, which disproportionately squeeze the working class. Hendrick Hertzberg has a compelling argument for a payroll tax "holiday" in this week's New Yorker.
Tagged
bloomberg
budget
income
new york
paterson
rich
taxes
John Del Signore
Originally from the Albany area, John Del Signore has called NYC home since 1995. In addition to his thousands of meticulously-crafted bespoke blog posts for Gothamist, his writing has also been published in The Awl, Deadspin, The Nervous Breakdown, and performed at The Brick Theater in Brooklyn.
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Gothamist is funded by sponsors and member donations
Gothamist is funded by sponsors and member donations
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