New York

Will Tax Competition Restrain Bloated State Budgets?

Governor Andrew Cuomo announced yesterday “a dramatic drop in state income tax revenue of $2.8 billion.” More high earners appear to be leaving New York than expected in response to the 2017 federal tax reform. “Cuomo said the law’s cap on deductions for state and local taxes at $10,000 was to blame and suggested it is, anecdotally, triggering high-earners to leave New York.”

One in a Billion Chance a Year of Being Killed by a Chain Immigrant in a Terror Attack

Yesterday, Bangladesh-born Akayed Ullah attempted a suicide bombing in New York City.  Fortunately, he only injured a few people and severely burned his own torso.  Ullah entered the United States on an F4 green card for the brothers and sisters of U.S. citizens.

Some are using Ullah’s failed terrorist attack to call for further restricting family-based immigration and the green card lottery.  After hearing about the failed terrorist attack, President Trump argued that “Today’s terror suspect entered our country through extended-family chain migration, which is incompatible with national security … Congress must end chain migration.”  Rep. Bob Goodlatte (R-VA), Chairman of the House Judiciary Committee, also argued for ending chain immigration and the visa lottery program.  He said ending those green card programs “would make us safer.”

Neither President Trump nor Rep. Goodlatte indicated how much safer ending chain immigration or the diversity visa would make us.  Since September 2016, I have been updating information on the number of people killed in a terrorist attack on U.S. soil by foreign-born terrorists according to the visa they initially used to enter the United States.

The Halloween Terror Attack in New York: The Threat from Foreign-Born Terrorists

On Halloween, Uzbek-born Sayfullo Habibullaevic Saipov allegedly murdered eight people and injured 12 with a rented truck in New York City.  The details of the attack, the number of victims, and Saipov’s personal information could change over the next few days.  However, based on the information that we have so far, Saipov entered the United States in 2010 as a lawful permanent resident with a green card.  He obtained his green card through the Diversity Immigrant Visa Program, which awards 50,000 green cards annually to those who enter the running from select countries. 

Uzbekistan has not been a major source of terrorists.  From 1975 through the end of 2016, three terrorists born in Uzbekistan attempted attacks on U.S. soil.  They killed or injured zero people in their attempted or threatened attacks.  Ulugbek Kodirov was convicted in 2012 of threatening to assassinate President Obama after entering on a student visa.  Abdurasul Hasanovich Juraboev entered on a green card that he won in a diversity lottery and also threatened to kill President Obama.  Fazliddin Kurbanov entered as a refugee and was convicted of possessing an unregistered explosive device.  Threats to assassinate the president are farfetched, but we count assassinations of politicians as terrorism just as the Global Terrorism Database does. 

If the death toll from the New York attack doesn’t rise, a total of 3,037 people have been murdered on U.S. soil by 182 foreign-born terrorists from 1975 through October 31, 2017.  Of those 182 foreign-born terrorists, 63 initially entered with green cards.  Including Tuesday’s attack, those who entered on a green card killed 16 people, or about 0.53 percent of all people murdered in terror attacks on U.S. soil committed by a foreigner.  If the number of injuries stays at 12, terrorists who entered on green cards have injured about 203 people during this period in attacks.  

The annual chance of being murdered in a terror attack on U.S. soil committed by a foreign-born person stands at 1 in 3,808,094 per year from 1975 through October 31, 2017. 

The Terrorism Risk of Asylum-Seekers and Refugees: The Minnesota, New York, and New Jersey Terrorist Attacks

News stories are now suggesting that the Minnesota stabber Dahir Adan entered the United States as a Somali refugee when he was 2 years old.  Ahmad Khan Rahami, the suspected bomber in New York and New Jersey, entered as an Afghan asylum-seeker with his parents when he was 7 years old.  The asylum and refugee systems are the bedrocks of the humanitarian immigration system and they are under intense scrutiny already because of fears over Syrian refugees.    

The vetting procedure for refugees, especially Syrians, is necessarily intense because they are overseas while they are being processed.  The security protocols have been updated and expanded for them.  This security screening should be intense.  The process for vetting asylum-seekers, who show up at American ports of entry and ask for asylum based on numerous criteria, is different.  Regardless, no vetting system will prevent or detect child asylum-seekers or child refugees from growing up and becoming terrorists any more than a child screening program for U.S.-born children will be able to prevent or detect those among us will grow up to be a terrorist. 

Adan and Rahami didn’t manage to murder anyone due to their incompetence, poor planning, potential mental health issues, luck, armed Americans, and the quick responses by law enforcement.  Regardless, some may want to stop all refugees and asylum seekers unless they are 100 percent guaranteed not to be terrorists or to ever become terrorists.  Others are more explicit in their calls for a moratorium on all immigration due to terrorism.  These folks should know that the precautionary principle is an inappropriate standard for virtually every area of public policy, even refugee screening.   

Should Low-Skill Workers Eat Cake?

Yesterday, the governors of California and New York signed legislation to raise their states’ minimum wage over the next few years to $15 an hour throughout California and much of New York. Similar proposals are percolating in other state and local governments, and Democratic presidential candidate Bernie Sanders has called for a national minimum wage of $15/hour.

Predictably, critics of raising the minimum wage are arguing that the higher wage floor will hurt employment for low-skill workers, the very people the wage floor is intended to help. A worker will be employed only if the value of his output is greater than the cost of employing him—a cost that includes wages, employer payroll taxes (e.g., Social Security, Medicare, unemployment insurance), training and outfitting costs, the new health care mandate and other benefits, etc. According to these opponents, the higher wage floor will reduce employment for low-skill workers and encourage employers to find non-labor ways to accomplish low-skill tasks (e.g., ATM machines, self-serve gas pumps, vending machines, automated phone answering systems).

Wage-increase supporters dismiss this concern, claiming there’s no proof that a higher wage floor hurts employment. A very large body of empirical research indicates otherwise, however, with the negative effects falling mainly on workers below age 25 (which isn’t surprising, as 77% of workers earning the federal minimum wage are below age 25, and they have few demonstrated work skills). Wage-increase supporters can argue the research isn’t unanimous, but given the one-sidedness of the extensive empirical evidence, that argument sounds a bit like climate change denial—if not creation science.

More thoughtful wage-increase supporters have begun offering a different argument: Yes, they concede, raising the minimum wage can hurt low-skill employment. But that harm is a worthwhile tradeoff for better wages for the remaining low-skill work: some workers may lose their jobs or some work hours, but others will get a raise.

This argument is important and interesting—in a Marie Antoinette* sort of way.

Traveling Into the Future, Despite Regulatory Traffic

Several science-fiction-like advances in transportation are currently underway. They may revolutionize the way people get around. Among the most exciting are hoverboards, driverless cars, and even fully re-usable rockets that could radically reduce the cost of space launches.   

Hoverboards are now a reality. You might even receive one as a present during the holidays. While they may not look exactly like the ones in Back to the Future, actual self-balancing, hands-free scooters are now on the market. Unfortunately, government regulations prohibit you from riding one outside if you live in the United Kingdom , or in New York City.   

Driverless cars are another promising technology. Just last week, Google patented a way for driverless cars to communicate with pedestrians, as well as a way for the company’s driverless cars to automatically unlock as their passenger approaches by recognizing the passenger’s Bluetooth device. As if the potential convenience of a computerized personal chauffeur weren’t enough, you may never need to fumble looking for your car keys again.  

The Year of Educational Choice: Update II

Educational choice is on the march.

As I noted back in February, the stars appeared to be aligned for a “Year of Educational Choice.” By late April, state legislatures were halfway toward beating the record of 13 states adopting new or expanded school choice laws in 2011, which the Wall Street Journal dubbed the “Year of School Choice.” The major difference in the types of legislative proposals under consideration this year is that more than a dozen states considered education savings account (ESA) laws that allow parents to purchase a wide variety of educational products and services and save for future education expenses, including college.

On Monday, Tennessee Gov. Bill Haslam signed the Individualized Education Act, an ESA program for students with special needs. Earlier this year, Mississippi enacted the nation’s third ESA law, behind Arizona and Florida. Lawmakers in Montana also passed an ESA, but Gov. Steve Bullock vetoed it earlier this month.

Nevertheless, Gov. Bullock allowed a universal tax-credit scholarship bill to become law without his signature. The law is an important step toward educational freedom, albeit a very modest one. Taxpayers can only receive tax credits for donations to scholarship organizations up to $150, meaning that a single $4,500 scholarship will require 30 donors. No other state has such a restrictive per-donor credit cap. Unless the legislature raises or eliminates the cap, Montana’s tax-credit scholarship program is likely to help very few students.

Turning New York City into Detroit?

I recently speculated whether Detroit’s fiscal problems should be a warning sign for the crowd in Washington.

The answer, of course, is yes, though it’s not a perfect analogy. The federal government is in deep trouble because of unsustainable entitlement programs while Detroit got in trouble because of a combination of too much compensation for bureaucrats and too many taxpayers escaping the city.

A better analogy might be to compare Detroit to other local governments. Some large cities in California already have declared bankruptcy, for instance, and you can find the same pattern of overcompensated bureaucrats and escaping taxpayers.

And the same thing may happen to New York City if the next mayor is successful in pushing for more class-warfare tax policy. Here are some excerpts from an excellent New York Post column by Nicole Gelinas:

Mayoral candidate Bill de Blasio…thinks New York can hike taxes on the rich and not suffer… De Blasio’s scheme is this: Hike income taxes by 13.8 percent on New Yorkers making above half a million dollars annually….After five years, de Blasio would let this tax surcharge lapse, and — he says — find another way to pay.

But there’s a big problem with de Blasio’s plan. Rich people are not fatted calves meekly awaiting slaughter.

In 2009, the top 1 percent of taxpayers (the 34,598 households making above $493,439 annually) paid 43.2 percent of city income taxes (they made 33.9 percent of income), according to the city’s Independent Budget Office. Each of these families paid an average $75,477. No, most people won’t up and leave (though if 20 percent did, they’d leave New York with less money than before the tax hike). But they can rearrange their incomes. Unlike most of us, folks making, say, $10 million have considerable control over how and when they get paid. That’s because much of their money comes from cashing out a partnership, or selling stock or a house or a painting. To avoid a tax hike, it’s easy enough for them to pay themselves earlier by selling their stuff earlier — before the tax hike. The city made $800 million in extra taxes last year because rich people sold their stuff before President Obama increased investment taxes in December. Or, people can pay themselves later — after the five years’ worth of higher taxes are up.

Gelinas makes some very important points. She warns that the city would have less money if just 20 percent of rich people escaped. She doesn’t think that will happen, but she does explain that rich people can stay but take some simple steps to reduce their taxable income.

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