In a rather self-destructive move, Democrats in the New York State Assembly are proposing a huge increase in the income tax rate on the state’s most productive and valuable people. A column in the New York Post correctly warns that this will drive entrepreneurs and investors to other states.
The State Assembly Majority announced yesterday that it’s considering a dramatic increase in state personal-income taxes that will come down hardest on New York City residents and the key industries that are the engine for economic growth across the state. …the measure would hike personal-income taxes 1 percent on households earning more than $250,000, 2 percent for those over $500,000 and 3 percent for those over $1 million. This translates into a combined city-state income tax of 11.5 percent to 13.5 percent. Add in federal taxes, and the burden approaches 50 percent. Taxes in New York City already are nearly 50 percent more than in any other US city. …This approach is also a money-loser for the state. Gov. Arnold Schwarzenegger last week said that half of California’s $14 billion deficit is due to people and business leaving the Golden State because of high taxes. If the Assembly measure passes, many of the city’s highest earners and biggest taxpayers – who all enjoy global mobility – are likely to pack up and leave. It’s a great economic development strategy – for New Jersey, Connecticut, Florida and London.
States such as Maryland and California already have demonstrated the damage caused by high state tax rates, but New York politicians apparently are oblivious to the real-world impact of such policies or they put class-warfare politics above every other relevant consideration.