Just as the emerging socialist superstars of the Democratic Party have begun to reveal their radical plans to radically tax the wealth, estates, and incomes of America’s top earners, New York Gov. Andrew Cuomo has finally faced the music of his own wild taxes on the wealthy.
As it turns out — and as it always will turn out — punishing economic success comes at a cost. New York’s progressively punitive tax rates lost the state $2.8 billion in income tax revenue, and Cuomo himself is blaming it on the mass emigration of millionaires and billionaires.
Cuomo, of course, is keen to blame this emigration on President Trump for the new tax law that caps the deductibility of state and local taxes. Aside from the delight to see the Democratic Party’s leading lights grousing that the wealthy aren’t getting bigger tax breaks, there is the shameful sight of the Democratic governor blaming Washington Republicans for problems created by New York Democrats.
Curbing the SALT deduction merely requires wealthier New Yorkers to foot the bill for their own recklessly high taxes rather than offload the cost of their profligacy onto other states.
Cuomo’s crusade casts an interesting light on the tax proposals of 2020 Democratic presidential front-runners. Sen. Elizabeth Warren, D-Mass., and Sen. Bernie Sanders, I-Vt., have capitalized on the Left’s growing taste for punishing the wealthy by touting massive tax hikes on the wealthy. Warren insists on a wealth tax on Americans with asset values at more than $50 million. It would raise $2.75 trillion in its first 10 years. Sanders wants an estate tax that would accrue $2.2 trillion in a time frame described by Sanders staffers as “an unknown period of time, because it would only take effect once they die.”
While fleeing the United States might not be as easy as fleeing New York, these high taxes will have a similar effect.
Tens of thousands of millionaires already flee France each year to escape their escalating tax rates. And now we’re seeing the widespread emigration of high-income earners from both New York and California to states with lower local tax rates. Cuomo can blame Trump all he wants, but if his party’s vision for the country begins to manifest itself in reality, Bermuda and Ireland may be the beneficiaries.
The governor, for his part, has at least conceded something most Democrats don’t: The wealthy within his own state already pay their fair share.
“If even a small number of high-income taxpayers leave, it has a great effect on this tax base,” Cuomo said of the top 1 percent of earners who pay for nearly half of the state’s entire income tax revenue. “You are relying on a very small number of people for the vast amount of your tax dollars.”
But Cuomo’s assertion doesn’t just describe New York. In tax year 2015, the latest set of figures publicly reported by the IRS, the top 1 percent of taxpayers paid for nearly 40 percent of all federal individual income tax revenue, a burden equal to the entire bottom 90 percent of earners.
Cuomo is wise enough at least to realize that there’s not much more room to tax the wealthy in his own state. If his disgruntled lamentations over fallen revenue indicate, he understands the economic reality and limitations of punishing the wealthy. The question is, will he be wise enough to let Democrats vying for the White House know?
