The CW is that if government raises taxes on wealthy New Yorkers, they'll leave town. After all, they have the means to do so while the poor and middle class do not.
Politicians use this as a justification for not taxing the wealthy all the time, and it's not a Democrat or Republican thing. Governor Paterson and Mayor Bloomberg spout this line constantly when pressed about it. And on the face of it, this idea certainly seems logical. Here's the problem: it's a giant crock.
The numbers simply don't support the claim that tax hikes on the wealthy cause them to flee. The main reason people move has to do with jobs, family, education, etc. Taxes is way down on the list. And it's actually middle class New Yorkers -- people getting priced out by living costs -- who are leaving the city in large numbers. Not the wealthy.
So, as usual, the conventional wisdom is wrong.
Honestly, if their taxes go up just a tiny bit, are the rich really going to say, "Oh, I have a great home, a great job, great friends, I love the cultural attractions of this city BUT my taxes went up a little bit -- time to go!" Please! Yes, in a vacuum, the idea that tax hikes on the rich would cause them to move. But do the rich live in a vacuum? Obviously not.
Sadly, this myth will continue to infect our political class and conversation forever. Thus, while trying to balance state and city budgets, taxes will get raised on the people who it hurts the most. Services will be cut to those who need them the most. The poor will pay more. That's just the way of the world.
Politicians use this as a justification for not taxing the wealthy all the time, and it's not a Democrat or Republican thing. Governor Paterson and Mayor Bloomberg spout this line constantly when pressed about it. And on the face of it, this idea certainly seems logical. Here's the problem: it's a giant crock.
The numbers simply don't support the claim that tax hikes on the wealthy cause them to flee. The main reason people move has to do with jobs, family, education, etc. Taxes is way down on the list. And it's actually middle class New Yorkers -- people getting priced out by living costs -- who are leaving the city in large numbers. Not the wealthy.
So, as usual, the conventional wisdom is wrong.
Honestly, if their taxes go up just a tiny bit, are the rich really going to say, "Oh, I have a great home, a great job, great friends, I love the cultural attractions of this city BUT my taxes went up a little bit -- time to go!" Please! Yes, in a vacuum, the idea that tax hikes on the rich would cause them to move. But do the rich live in a vacuum? Obviously not.
Sadly, this myth will continue to infect our political class and conversation forever. Thus, while trying to balance state and city budgets, taxes will get raised on the people who it hurts the most. Services will be cut to those who need them the most. The poor will pay more. That's just the way of the world.
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