Attempts to soak the rich in NYC will only exacerbate the wealth exodus going on amidst tax reform and Covid-19.
It’s been a tough year for New York City. Once the epicenter of a pandemic, the city now risks being destroyed by a first-in-the-nation wealth tax designed to aid illegal immigrants, brought by the same Congresswoman who stopped Amazon from creating jobs in the Big Apple. What’s more, amid calls to defund the police, crime has spiked, with murders up 50%.
Times will get even tougher for The City That Never Sleeps. The problem? The multimillionaires and billionaires who call the city home have left for their summer homes—and could make the move permanent.
As New York Governor Andrew Cuomo lamented in a recent briefing,
I literally talk to people all day long who are now in their Hamptons house who also lived here, or in their Hudson Valley house, or in their Connecticut weekend house, and I say, ‘You got to come back! We’ll go to dinner! I’ll buy you a drink! Come over, I’ll cook!’
Amid this backdrop of an exodus of wealth, NYC’s budget deficit has exploded. With state and federal aid trickling in, the gap is likely to get far larger with the absence of large taxpayers.
Much of the blame can be attributed to Mayor Bill de Blasio, who has alienated many constituents of the city, as well as the police who have been the backbone of keeping America’s largest city a bastion of law and order for three decades.
Not to mention, NYC already instituted a “mansion tax,” which hasn’t raised revenues as much as caused a drop in luxury home and apartment sales.
While the issue may appear related to the pandemic, Covid-19 has only accelerated a process of wealth exodus in recent years.
The most significant change driving the move has been rising taxes in NYC, as well as the threats of a wealth tax. For the tax-averse, another considerable change happened as well: The Trump administration’s tax reform law.
This reform capped total state and local tax (SALT) deductions to a mere $10,000 starting in 2018. For those in high-tax states or cities, the overall tax cuts of the program represented a very real tax increase overall.
That has led to a billionaire exodus to more tax-friendly locales, most notably Florida, which has no state income tax. Among those making the address change is none other than NYC developer turned U.S. President Donald Trump.
It’s also no surprise that Democrats want to undo the SALT deduction, and the matter has become a contentious issue in the latest round of coronavirus relief being debated in Congress.
With higher tax rates likely on the way, the wealthy will continue heading to where they’ll be the least hit.
As long as murder rates rise in the big cities, who can blame the wealthy for heading out to greener pastures and less expensive housing markets?