Posted on 02/09/2019 7:11:35 PM PST by SeekAndFind
Governor Cuomo blamed President Trump and the Tax Cuts and Jobs Act for a decrease of $2.3 billion in New York State tax revenues in December and January. He indicated that the revenue reduction was the result of the new federal tax law. He believes an unprecedented number of New York residents permanently moved from New York to Florida during 2018 because New York State taxes are essentially no longer deductible on federal income tax returns of wealthy taxpayers.
Just a wild guess, but a loss of 11% in the Dow Industrial Average during the fourth quarter of 2018 might have had a bit more impact on New Yorkers’ taxable income in the fourth quarter than a few taxpayers leaving the state. Individual taxpayers undoubtedly recognized few capital gains during that period, but undoubtedly did recognize losses.
$2.3 billion is a huge amount of money. But, in New York State, $2.3 billion represents only 1.3% of the State’s annual revenues of $175 billion. A responsible budget would have reserves far more than 1.3% of projected revenues.
There is little, if any, evidence to support that enough New York residents moved out of the state to cause a two-month impact of $2.3 billion. $2.3 billion equates to an annual reduction in taxable income for the State of New York of about $26 billion. In 2016, $26 billion was greater than one-half of the total interest, dividends and capital gains of every New Yorker reporting more than $1 million of taxable income. The number of residents moving out of new York would have cratered the New York housing market as well as caused bubbles elsewhere. It just did not happen.
What would make a taxpayer move from New York? Could it be the sole result of a loss of a deduction for New York taxes? Ignoring the new tax benefits in the new federal tax law, including the reduction in rates, that change will cost each wealthy New York resident about $33,600 per year per million dollars of income. Would someone earning $10 million per year in interest and dividends leave New York to save $336,000 per year?
Given that the top federal income tax rate decreased by 2.6% for wealthy taxpayers in 2018 and taxpayers owning rental real estate or owning a small business received new tax deductions, overall, these two benefits pretty much offset the state tax deduction for most wealthy taxpayers. Total taxes for wealthy New Yorkers likely stayed about the same.
In the remote chance that the Governor is correct (I think not) in his reasoning, he needs to pare back his future budgets or raise taxes by startling amounts. If that reduction in income actually resulted from taxpayers having moved from New York, his state is in dire straits. It does not take a PhD in math to multiply $2.3 billion times 4 and conclude New York’s governor is going to need to reduce annual future spending by $9.2 billion per year. If Governor Cuomo is correct and these residents are gone forever, the State of New York is looking at a permanent 25% reduction in individual tax revenues. To put such an amount in perspective, $9.2 billion is almost equal to the entire budget of the nearby state of Rhode Island. And what if more New Yorkers flee the state?
And if Governor Cuomo is correct, New York taxpayers must have reacted to the Tax Cuts and Jobs Act like Superman, faster than a speeding bullet. The federal bill passed in December 2017; to no longer be a New York resident in 2018, the taxpayer must have spent less than 184 days in New York during 2018 and ‘pass’ a series of somewhat subjective and arbitrary tests to be considered a former resident. Sales and escrow closings do not occur overnight.
Governor Cuomo remains upset that New Yorkers now have a limit on the deductibility of state income taxes that is effectively equal to the state tax deductions available in other states. After decades of low tax state taxpayers indirectly subsidizing New York’s welfare state, now those state taxpayers are on equal footing with New Yorkers.
Governor Cuomo is likely wrong in the short run, but over time, if New Yorkers do not believe the State of New York is the best place for them to live, they will move elsewhere. Part of that equation for each individual will be New York tax rates. Every state is in competition for tax paying residents.
Free tuition for Illegals. Yeah....that’s the ticket!!
LOL. Those Cuomos. What a bunch of clowns. All of ‘em.
Embrace the suck.
because New York State taxes are essentially no longer deductible on federal income tax returns of wealthy taxpayers...
I’m not rich and live in NYC (Staten Island).
Tax refund was great last year.
Even the brutal NY and NYC could not stop Trump’s changes from giving me a windfall.
Either way, at 50, i’m ready to move to PA.
Have to wait for wife’s mother to die first.
I like her and she treats me great so i’m torn...
Hey Andrew. Alexandria Ocasio-Cortez lives in your state. Why don’t you ask her how to deal with this economic shortfall in New York? I’m sure she has the solution to your problems there. She seems to be the go to person in your party when it comes to economic issues!
Cummo youd have 10 bill from gas drilling but you banned it you moron.
Do the California hustle .... raise taxes on those remaining and raise government salaries and benefits to keep the dedicated bureaucrats. Might want to get a bunch of illegals on welfare ... Mother Pelosi says welfare stimulates the economy.
No, Governor, taxpayers in other states are no longer subsidizing the high state tax rate in NY.
The very wealthy are exfiltrating FROM New York State and New York City in particular. And as they go, they are closing the businesses they once prospered in in that benighted municipality, with resulting unemployment as those thus dispossessed of gainful employment are left with the ever-diminishing opportunities that grow more scarce by the day.
Oh, there are folks still flocking to New York City, but they are of much more modest means, if they have any at all. They are looking for the prospect of a handout which seems to be held up by both De Blasio and Cuomo, but which shall never be put into practice.
Aww. The mongrel is whining. Maybe you can sell some baby parts to close the gap in your budget. I shouldn’t give him any ideas.
Loss on future taxes due to aborting future wage earners.
Trump grants the very thing they said they were OK with and all they got is tears....
RE: Loss on future taxes due to aborting future wage earners.
The author of the book Freakonomics in effect, called the aborted, future welfare recipients and possible criminals.
Best of luck to you and yours. Take mom-in-law with you if you can. But if you can’t and your wife’s mom gets called home by the Good Lord, may her journey be easy. God Bless.
I’m a little confused. How does the federal tax reform bill effect state taxes and operations. That is separate from the feds.
https://www.heritage.org/taxes/commentary/separating-economic-facts-fiction-the-trump-tax-cuts
rwood
RE: How does the federal tax reform bill effect state taxes and operations
Well, as a New Yorker, I can tell you that it affects tax payers in NY in two ways:
After the “Tax Reform” bill passed at the end of 2017, which takes effect in the 2018 tax year,
1) State taxes are NOT deductible at the Federal Level and we have one of the highest State Income Taxes in the nation.
2) Property Taxes are only deductible up to a maximum of $10,000. The problem is — those living in the suburbs of Long Island and Westchester have property taxes ABOVE $10,000.
It used to be when you pay property taxes of say $14,000, the entire $14,000 is deductible at the Federal level, now, you can only deduct $10,000 of that and $4,000 is Taxable at the Federal Level.
A lot of New Yorkers end up having a TAX INCREASE.
(warning may cause vomiting)
He bragged about how proud he is to soak the rich. Then he says that soaking the rich won't work. Chris Plante is right, the Cuomo brothers are dumber than dirt.
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