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
“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.
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!
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.
I have never heard of the guy and I have lived in the state for over 40 years. Republicans have held very few statewide offices for decades.
Faulconer was mayor of San Diego for 2 terms. I’m not even from California and I’ve heard of him. I travel to San Diego and thr city has done well over the last decade morso than LA or the Bay Area. Faulconer is as good as they get imo. California could do a lot worse and has. I guess Jerry Brown could come back again and put the Dems in their place.
We don’t need “Republicans” who act like Democrats. They are morally bankrupt as much as the Dems.
There is an opening in California where Democrats have lurched too far to the left on some issues. If you call everyone morally bankrupt you run out of people fast.
I nominate Doctor David Collum of Ithaca, New York for Governor.
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
When I lived in NY State, the top state rate was 14% on taxable income above $23,000 for a single person.
I’m skeptical about that.
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.
Perhaps WV has leverage, but if Manchin gets stuff for WV because he’s a marginal democrat on fiscal matters you better believe other Senators will begin asking for stuff too.
One marginal vote creates more marginal votes just by existing.
I’d like to know Mish’s solution if he were in Cuomo’s position.
All I can say is, you right, you right.
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.
Pretty bad optics too, when people make more in retirement than they did when they were working…and there is no way, right? The math doesn’t come close to working.
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?
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.
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.
“..,Fund low-productivity red states through federal transfers…”
Ok, I’ve been hearing this for 30+ years. How has this been occurring through the various congresses and presidential administrations and what are those federal transfers?
Is NY state blue or red outside NYC-Albany? Chicago metro/rest of IL? Detroit/rest of MI? Milwaukee-Madison/rest of WI?
Perhaps dialing down the overreach of the federal government back about 110 years will solve this to satisfaction of everyone.
By all means keep the federal government out of Indiana. If someone needs an special bathroom we’ll install another seat in the outhouse,
“ How has this been occurring through the various congresses and presidential administrations and what are those federal transfers?”
The small states use their disproportionate influence in the Senate, presidency and judiciary to feather their nests.
Whenever I meet a conservative flyover state Republican who rants about socialism, I agree with him and state my strong preference for the elimination of all agriculture subsidies, price controls, etc.
He ends up passionately defending socialism at that point, and often insists that the country cannot exist if the successful states don’t subsidize the unsuccessful ones. That’s straight out of Marx!
The numbers tell the story. Every citizen of Illinois pays over $1K in net tax to DC, so that red states like Iowa get a windfall of $700 per citizen in sweet, sweet redistributed socialist cash. No wonder the GOP’s color is red!
If that is the solution, we should move to 50 separate republics (or more) who participate in an EU like defense and trade union.
Do you really think the”have not” states will go along with your proposal? Definitely not. Back in 2000, California Republicans were too chicken to even sponsor a state ballot constitutional amendment to cancel the big improvement in state pension benefits that the Democrats had passed the year before. It is easier for people to leave a state than wait for politicians to fix things.
Of course the “have not” states will oppose it. That’s the whole point. Next time any red state complains about “socialism” when the feds propose common sense policies like health care reform or support for individuals facing ruin in an emergency, sensible Democrats can simply offer to repeal the socialist policies keeping those red states going.
When the red states object, the common sense Democrats can say “okay then, since we have established that you value federal aid, let’s get to work helping Americans who need it.”
There’s no argument the red states can make against common sense at that point.
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.
“…..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.”
While there’s truth in your statement, “Wall Street” won’t move.
Most major financial, investment & trading institutions have no choice but to maintain a presence there for the electronic/speed advantages…especially HFT hubs that give a competitive edge.
And I guess a lot of people come in on the train to work from Connecticut. I had a friend who was once a corporate VP with his own jet….he lived…still lives…. in Westport…but back in the day he kept an apartment in the city too. So much money in NY….
“And I guess a lot of people come in on the train to work from Connecticut”
Most do, they work in NY and get taxed on it atop CT for their residence.
That said, not knowing current tax code, I do recall back ten years ago some of these exec’s were paying effective rates in the single digits.
I don’t condone 80% rates, as in the 50’s, but there are extremes at either end.
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
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…