Return Of The “Success Tax” Could Jeopardize New York’s Economic Recovery
For all the talk of newfound fiscal responsibility in state government, the fact is that for certain liberal politicians and special interests in Albany it remains exactly that: talk. Judging by their actions, these folks simply will not stop until they have rammed through yet another tax hike that destroys more private sector jobs and jeopardizes New York’s economic recovery. The Albany liberal politicians desperately want to get their hands on more of your hard-earned money and they are determined to do so – by hook or by crook.
BACK FROM THE GRAVE: THE “SUCCESS TAX”
Think I’m exaggerating? Think again! Last week, the Success Tax – a.k.a., the so-called “Millionaire’s Tax” – was brought back to life and re-introduced as legislation in the State Assembly. I refer to it as the “Success Tax” because that’s precisely what it is: a tax on hard-working, successful New Yorkers. You may recall that the enacted 2011-12 State Budget did not contain an extension of the Success Tax – and as one of the most outspoken opponents of this tax, I gladly reported on its defeat. I also wrote in the same column that despite the setback, certain liberal politicians in Albany would not get the message and ultimately try to resurrect the tax. Why? Because they are hopelessly addicted to spending your money.
NEW YORK NEEDS JOBS, NOT CLASS WARFARE RHETORIC
When you hear such a loaded phrase as “Millionaire’s Tax,” realize that it is nothing more than political propaganda, and not a statement of fact. The intentional use of the word “millionaire” is a retread of the tired class warfare rhetoric from the 1980s and 1990s that tried to pit one group of taxpayers against another. It didn’t work then and it won’t work now. Class warfare has never created a job, built a business, or put people back to work. Class warfare did not build the middle class or make America successful. Hard work, entrepreneurship, risk taking and the private sector did. Unfortunately, despite these facts, class warfare is seemingly alive and well in our State Capitol.
TAX HIKES KILL JOBS & HURT THE ECONOMY
In his testimony before the Joint Legislative Fiscal Committees back in February of 2011, E.J. McMahon – a highly respected, independent and non-partisan fiscal expert – repeatedly warned policymakers against extending the state income tax surcharge on successful New Yorkers.
In his official testimony (available at the Empire Center for New York State Policy, located on-line at their Web site), McMahon said the following: “Higher income taxes create a disincentive to work, save and invest in New York. They sap the working capital of small businesses, and they provide the state’s most successful and mobile taxpayers with another reason to consider shifting their base of operations to lower-taxed states…. Economists and tax-policy analysts have long recognized a link between taxpayer behavior and changes in marginal rates, especially in higher income brackets, where taxpayers have more control over the timing and nature of their incomes. When rates rise sharply, taxpayers respond by working and earning less, by shifting their tax ‘domicile’ to lower-tax jurisdictions, and by using legal strategies to shift or shelter income in tax-exempt investments.”
ECONOMICS 101: WHEN YOU TAX SOMETHING, YOU GET LESS OF IT – AND SUCCESSFUL PEOPLE LEAVE
What McMahon was essentially saying is that whenever government hikes taxes on successful people, as New York irresponsibly did in 2009, it creates an economic disincentive for them to work harder because what they earn is now taxed at a much higher rate. It’s Economics 101: when you tax something, you get less of it. McMahon also spoke to the reality that when taxes rise, successful people leave. Case in point: billionaire Tom Golisano, founder of Paychex and former owner of the Buffalo Sabres. Soon after New York imposed its Success Tax Surcharge, Golisano penned an op-ed where he specifically cited New York’s rising taxes as a reason he was leaving the Empire State for the Sunshine State. As a result, Florida gained another successful New Yorker – and our state lost approximately $13,800 a day in revenue from Golisano’s departure. “I leave New York” indeed.
DEFEAT OF THE SUCCESS TAX WILL HELP OUR STRUGGLING ECONOMY
Traditionally, New York’s economy enters a national recession later than other states. It also leaves a recession later than other states, meaning that our economy is usually struggling to add jobs and put folks back to work long after other states have already been doing so. This is the proverbial rock and a hard place that New York finds itself caught between as our number of unemployed remains close to 800,000 – a figure that is likely much higher when underemployment is accounted for. With almost 800,000 citizens out of work, how in the world could it make any sense to anyone to INCREASE taxes on the very same people we expect to create jobs? It makes no sense, whatsoever.
Defeating the Success Tax once and for all will help our struggling economy and create an environment where private sector jobs can flourish. Albany needs to focus on resurrecting the promise of good-paying jobs and a better tomorrow, not rehashing political class warfare or bad public policy like the Success Tax.
As always, constituents wishing to discuss this topic, or any other state-related matter should contact my district office at (315) 781-2030, or e-mail me at email@example.com.