Are you a wealthy New Yorker? The answer to that question today is more likely to be no than it was a year ago because, true to warnings, wealthy New Yorkers have been fleeing the state since it jacked up taxes on them this spring. The world has changed, but Albany hasn't noticed.
People get around more than they used to. Travel is less costly than decades ago. Telecommuting is popular. Living where you work is not the critical factor it was years ago. Just ask B. Thomas Golisano, the billionaire businessman who moved to Florida this year rather than pay $13,000 a day in New York's exorbitant and ever-escalating taxes.
Facing a massive budget deficit in this historic recession, Albany added an $8 billion array of new taxes and fees including a disproportionately larger hit on the incomes of the wealthy. Lawmakers in the Democrat-controlled Legislature, with the governor's grudging consent, made wealthy New Yorkers pay higher income tax rates, higher taxes for luxury vehicles, charged them more to enter a horse in a race and more to play the real estate market. Tax loopholes should be closed, but the rest is a punishment for success that backfired on the Legislature; income tax receipts so far already are some $600 million below projections.
Not rich? You're still not spared. When the wealthy leave, they tend to take companies, investments -- and the jobs they provide -- with them. And the state loses a major chunk of tax revenue to support its own spending.
Many said the wealthy could afford the higher costs and, more, that it was their duty to step up in hard times. That may be true, but it didn't mean they would, and a prescient few warned that wealthy New Yorkers would flee to more fiscally responsible states than remain where Albany would continue to pilfer from them as the recession dragged on.
They did. Early revenue pictures are painting an ugly picture. The outlines suggest that the strategy may, indeed, have caused wealthier New Yorkers to get out. Revenue projections are falling short, despite the tax increases. "We've probably lost jobs and driven people out of the state," Gov. David A. Paterson said on Wednesday.
Now, a new $3 billion budget gap has opened and it's hard to believe Albany has learned any important lessons. The state's options are to tax the wealthy even more, which would assuredly drive even more of them out; tax the middle class more; or reduce spending. The latter course is obvious to elected officials in other states, but not to Assembly Speaker Sheldon Silver or Senate President Malcolm A. Smith.
In a recent discussion with The Buffalo News' editorial board, Paterson said he didn't believe the state could tap the wealthy again. Lt. Gov. Richard Ravitch went a step further, declaring that in his opinion, "we're at the outer limits of the elasticity of our tax system." These are Democrats talking. Yet the history of the Legislature shows a resistance to budget cuts that verges on the pathological.
The continual rise in spending and taxing can't go on in New York. It has to stop. The best hope for responsibility in approaching this deficit and next year's budget is for Paterson to draw a line and refuse to cross it. He could veto any plan to raise taxes or fees. Lawmakers might override that, but at least voters would know where to place the blame.