The attempts by Gov. Andrew Cuomo, D-N.Y., to gain attention and improve his position as a potential presidential contender often involve stunts that waste tax dollars while simultaneously revealing his administration’s long history of mismanagement.
One such ploy was the much-lampooned Start-Up NY, which was intended to attract businesses to the state by running ads across the country and promising no corporate taxes for 10 years. In its first year, 2015, the program created 76 jobs; by its third year, 2017, it had created 1,135 jobs, or 27 percent of the 4,140 predicted over five years.
Lately, Cuomo has been making the rounds denouncing the Tax Cuts and Jobs Act as a savage attack on New York, including a lawsuit against the bill that will almost certainly be laughed out of court and leave state taxpayers with the tab. His biggest complaint is the $10,000 cap on the state and local tax deduction.
Obviously, in states with high taxes, this outcome is more pronounced. Since New York has the highest state tax burden, the 34.5 percent of Gov. Cuomo’s constituents who itemize their deductions are about to see the real cost of these high taxes. The overwhelming majority of New Yorkers, like the overwhelming majority of all Americans, are going to pay less in taxes thanks to the doubling of the standard deduction and lower rates.
But ultra-rich New Yorkers, including some of the governor’s biggest donors, may pay more as a result of the SALT deduction cap. This may cause them to become unhappy with the amount they pay in state taxes, and, heaven forbid, they may ask their governor to lower them.
The lawsuit is one of several strategies Cuomo has weighed as he virtue-signals to the left and tries to cover up the true cost of his tax-and-spend governorship. He has floated the idea of shifting to a new state payroll tax; this would be a regressive tax paid disproportionately by the poor and a complex, expensive burden for businesses. He has also (not entirely wrongly) blamed local governments for collecting excessive property taxes and suggested they must cut costs.
The prospects of high-tax states’ attempts to contort their way out of the SALT situation, however, are less than optimal. If Cuomo truly wishes to solve the problem, he must re-examine his state’s longtime culture of punishingly high taxes and reckless spending, a direction in which he does not seem interested in going. In fact, his 2018 state budget proposal includes tax increases, which he refers to as “revenue actions” and “revenue raisers.”
That’s a shame, because New York’s taxes have suffocated economic growth and driven businesses away. The population growth of the state that once boasted 13 electoral votes more than the next-largest state has stagnated to such an extent that it was overtaken for third place by income tax-free Florida in 2014. In 2017, 61 percent of interstate moves involving New York were outbound. Millionaires are fleeing New York in droves thanks to the toxic combination of Cuomo’s and New York City Mayor Bill De Blasio’s repeated tax hikes.
Cuomo’s fellow high-tax neighbors have had an easier time coming to terms with the federal tax reform. New Jersey Senate President Steve Sweeney, a Democrat, pledged “to reevaluate everything” and scrapped plans for a millionaires’ tax as a result of tax reform. Even Gov. Dan Malloy, D-Conn., who has been quite fond of high taxes, has seen the folly of soaking the rich. He observed on April 28, 2017 that “we get most of our money from very few people and that can produce some very wild swings” when the rich finally get fed up with taxes and move out of the state. To his credit, Connecticut’s budget agreement for fiscal years 2018-2019, difficult as it was to hammer out, did not include income or sales tax hikes.
Even Cuomo once understood that taxing the rich was not the way to prosperity, saying in February 2017: “People will take a certain amount of abuse and then there is a point … you don’t want to reach that point.” Now, he believes his path to higher office means outdoing everyone else’s outrage about whatever the Trump administration does, even if that crushes New York taxpayers, at least the ones who still live there.
Spencer Chretien (@SpencerChretien) is a contributor to the Washington Examiner's Beltway Confidential blog. He is state policy manager at Citizens Against Government Waste.
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