You saw in Summer 2020 how many Americans wanted to escape the city. Riots, looting, and COVID-19 drove many urbanites away from their city homes and into the country. Nowhere was hit quite as hard as New York City. Between January 1, and December 17, 2020, about 3.57 million mostly wealthy people left The Big Apple.
Now, Governor Andrew Cuomo wants them all to come back to pay a nightmarish menu of higher taxes. What a way to roll out the welcome wagon for the state’s most important taxpayers. The top 5% of filers in New York contribute over 60% of the state’s revenue, according to The Wall Street Journal. Now, Cuomo and the state’s Democratically controlled legislature want to raise taxes even further. The dislocation, literally, between productive, successful New Yorkers and government looking for more taxes continues. The Journal writes:
• Income taxes: Impose graduated rates on millionaires, up to 11.85%. This is much higher than today’s top marginal levy of 8.82% on joint filers earning $2.2 million. Under the Assembly’s plan, that existing bracket would be taxed at 9.85%. Earnings above $5 million would be hit with 10.85%. The new top marginal rate, 11.85%, would kick in at $25 million.
Since New York City has its own income tax, running to 3.88%, the combined rate would be 15.73%. That’s a bigger bite than even California’s notorious 13.3% top tax, and don’t forget Uncle Sam’s 37% share. Pretty soon living in a low-tax state looks inviting. Keep in mind that New York’s income tax is already progressive: The top 5% of filers contribute more than 60% of the revenue, the Journal reports.
• Capital-gains taxes: Put a 1% surtax on investment gains by people earning $1 million a year. That percentage might sound small, but New York already taxes capital gains as regular income. So start with the Assembly’s new top marginal rate of 15.73% for a Manhattanite. Add the 1% surtax. The top federal rate on cap gains is 23.8%. The grand total would be 40.53%, and that’s before Joe Biden’s campaign promise to tax capital gains federally as regular income. What a thanks for investing to create jobs in the city.
• Estate taxes: Raise the top rate to 20%, from today’s 16%, for taxable estates above $10.1 million. Remember, again, this is stacked atop the federal estate tax of 40%, meaning the government’s marginal take would reach 60%. Is it any wonder that wealthy people spend big bucks hiring estate lawyers?
• Pied-à-terre tax: Put a state levy on “high-value” second homes in New York City. The rates on “family residences of one to three units,” the Assembly says, would run from 0.3% to 4% of the value over $5 million. For condos and co-ops, it’d be 10% to 13.5% of the value over $300,000.
What kind of state welcomes its refugees back with a demand for the highest percentage of taxes in the country?
Action Line: If you found a better place in America for you and your family, stay there. Don’t reward politicians who just want to tax your income by living in their state. There will never be enough revenue to satisfy Albany, or Sacramento, or Springfield, or Lansing. Build yourself an island in some other state.
E.J. Smith - Your Survival Guy
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