Governor Cuomo's Pitiful Tax Hike Ultimatum Will Punish New York

Mish

New York’s Governor says bail him out or he’ll be forced to punish New Yorkers with tax hikes.

Biden Elected, Begging Starts

It did not take long for the begging to start. 

New York Governor Andrew Cuomo launched the effort with a Tax Hike Ultimatum. 

“If the federal government doesn’t fund state and local governments, it’s going to hurt all New Yorkers,” Mr. Cuomo warned Tuesday while proposing to raise the state’s top income tax rate in New York City to 14.7%. This would be the highest rate in the country, at least until New Jersey Gov. Phil Murphy makes a competing bid.

Mr. Cuomo’s ultimatum goes like this: Democrats in Washington must deliver $15 billion in budget relief pronto or he will raise the state’s top tax rate to 10.82% from 8.82% on income over $100 million and create four new tax brackets on income of more than $5 million. New York City has a top rate of 3.88%, though Mayor Bill de Blasio wants to raise it too.

The Governor says the higher rates would be temporary, but New Yorkers know better than to believe him after he broke his promise to let the millionaire’s tax that Albany imposed during the 2009 recession expire. Mr. Cuomo is also begging Democrats in Congress to lift the $10,000 state-and-local tax (SALT) deduction limit to mitigate his tax hike.

Add these tax increases to Medicare taxes, and some New Yorkers would pay a marginal tax rate as high as 64% under Mr. Cuomo’s plan. Florida Gov. Ron DeSantis may need to set up temporary asylum camps in Palm Beach for the waves of New York tax refugees.

Pitiful, Just Pitiful

Gratefully, I expect Cuomo's pitiful plea to go straight to the ash pile of requests not delivered where it belongs.

Why?

There is not a single Republican senator who will vote to bail out New York, New, Jersey, Illinois or other corrupt states with union pension woes of their own making.

In Search of a Senator

Given the 50-50 Senate split, it only takes one Democrat to stand up to such fiscally mad proposals.

The most likely candidate is West Virginia Senator Joe Manchin. 

Politico notes Manchin emphatic he 'will not vote' to kill the filibuster

Also note that Manchin is in a Bipartisan group of senators pushes back on Biden Covid plan.

The bipartisan group of 16 senators held a call with Brian Deese, director of the White House National Economic Council, Jeff Zients, Biden’s coronavirus coordinator, and Louisa Terrell, head of White House legislative affairs on Sunday afternoon — the first of what’s sure to be many conversations between centrists and the Biden administration.

The 75-minute call, set up by Sen. Joe Manchin (D-W.Va.), is one of the first big calls the Biden administration has held as it works to build cross-party support for the $1.9 trillion plan. Senators asked for more data on how the White House filled out its plan.

Susan Collins (R-Maine) pressed the Biden officials on why families making $300,000 would be eligible and urged a focus on lower-income workers.

Sen. Angus King (I-Maine) also questioned the price tag: “This isn’t monopoly money,” as he put it.

Manchin is a Democrat senator in the most trump-friendly state. His statements suggest that he will not stray too far fiscally. 

King caucuses with the Democrats and if either one of them says "no" to state bailouts, they won't happen.

There might be others. In general, Biden will have a difficult time.  

Go Ahead Cuomo, Go Ahead

So, governor Cuomo go ahead. Raise those taxes. 

I am curious to see how big the New York exodus will be.  And I always need some new things to write about.

Mish

Comments (37)
No. 1-15
njbr
njbr

The cities--the whipping boy of people like Pol Pot and Mao.

The dens of iniquity. The enemy of the true people of the soil.

How dare they...

Sechel
Sechel

Just focuing on NYC De Blasio seem unwilling and unable to curtail his social ambitions and run balanced budget. He simply insists on a NYC verion of the great society

Eddie_T
Eddie_T

COVID is moving up the calendar on all these fiscal crisis situations that have been on the back burner. Looks like living in NYC will come at a high price....I’m sure somebody will still live there.....but nobody who has money will stay unless they have to for business....which appears to be less and less necessary for most people in financial services.

Neoliberal Elitist
Neoliberal Elitist

New York and other similar states are in a bind. They have to pay taxes twice — once to fund the low-productivity red states through federal transfers, and a second time to fund their own operations.

A federal constitutional amendment preventing excess transfers from “have” states like NY to “have not” states like KY, IN and FL would go a long way towards fixing this issue.

Six000mileyear
Six000mileyear

Any marginal tax rate above 50% effectively makes one a slave to the government. The logical choices to marginal tax rates above 50% are to move to where the marginal tax rate is less than 50%, or to stop producing just below the 50% marginal tax rate. Both logical choices result in less revenue for the government than it planned on.

KidHorn
KidHorn

I thought Cuomo and De Blasio were doing a great job handling the COVID outbreak. I've been told this repeatedly on TV. So why would they need a bailout?

Bungalow Bill
Bungalow Bill

Having lived in Illinois, it's really time to stop the madness of these pensions. A state should not be left to ruin because of ill advised promises of the state. You can only put up with picking so many pockets for such madness before you have less and less pockets to pick from. Unfortunately, some of the people who leave these states pollute the states they move to with bad policy.

Frilton Miedman
Frilton Miedman

I'd like to know Mish's solution if he were in Cuomo's position.

JoeJohnson
JoeJohnson

Those are the consequences of electing Democrats and we will see this on a national scale now. As to whether NY will get federal help, I think Democrats will have 9 chances to push thorugh a budget reconciliation which takes only 50 votes plus Harris. I'm sure there's a way to bribe Manchin, WV is a small state that has a lot of leverage now.

Anon1970
Anon1970

When I lived in NY State, the top state rate was 14% on taxable income above $23,000 for a single person.

Anon1970
Anon1970

The high state income tax rates are in addition to high real estate taxes in some parts of the state. https://www.empirecenter.org/wp-content/uploads/2019/11/Property-Tax-Benchmarking-2019.pdf

Casual_Observer
Casual_Observer

I think what Cuomo is trying to do is a good thing in the long run for New York. Eventually they will have to cut spending because they cannot tax their way out of the problem. It is true though to a much lesser extent here in California. I do think California will have a recall election this year. Kevin Faulconer would make a great governor because he holds everyone accountable. He has broken away from traditional Republicans across the country and turned into a moderate one. The Republican party would wise to find less Trumps and more Faulconers for their elections going forward.

General Ripper
General Ripper

I'm a NJ resident in FL for 2 months. All the chatter down here is swapping NJ & NY residency to Florida. People of means can do that easily because their are plenty of estate lawyers willing to lend a hand!

RonJ
RonJ

“If the federal government doesn’t fund state and local governments, it’s going to hurt all New Yorkers,” Mr. Cuomo warned

If the federal government does fund state and local governments, it is going to hurt all New Yorkers.

Nothing occurs in a vacuum.


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