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AOC’s proposed billionaires tax would spur exodus of wealthy from New York, report says

Boosting taxes on the rich to aid illegal immigrants and other New York residents excluded from coronavirus emergency federal assistance would cause an exodus of the state’s wealthiest residents, who also generate a huge chunk of the city and state’s tax base, a top business advocacy group says.

The warning shot from the Partnership for New York City comes a day after Rep. Alexandria Ocasio-Cortez and a coalition of progressive groups launched a campaign to pressure Gov. Andrew Cuomo and the Legislature for a billionaires tax they say would generate $5.5 billion.

“Stabilization of the tax revenue base to avoid further losses should be the first objective in a recovery plan … The idea of raising tax rates on the highest earners could have the effect of creating further losses.

“The top 1 percent of earners who currently account for almost 40 percent of state tax revenues are highly mobile,” the Partnership said in a report that includes recommendations on how to recover from the COVID-19 recession.

“Many relocated to other locations during the pandemic and, after five months working remotely, some may consider permanent residence outside the city or state,” the report said.

The study noted that the coronavirus outbreak caused a temporary exodus of about 5 percent of mostly wealthy city residents who decamped to second homes outside New York.

“If this pattern holds, the tax losses facing the state and city will be extended,” the business group said.

On Thursday, Ocasio-Cortez said in a video, “Governor Cuomo, we need you to pass a billionaire’s tax, in order to make sure that we’re providing for our working families. It’s time to stop protecting billionaires, and it’s time to start working for working families.”

Andrew Cuomo
Matthew McDermott

New York’s 118 billionaires have increased their net worth by $44.9 billion during the pandemic, a reported cited by the Fund Excluded Workers Coalition said.

But Cuomo on Thursday rejected the tax-the-rich proposal, agreeing with the claim from businesses advocates that it would encourage flight from New York.

“If they want a tax increase, don’t make New York alone do a tax increase, then they just have the people move to Connecticut. Let the federal government pass a tax increase. And let them apply it all across the country, so you don’t hurt any one state. Because if you take people who are highly mobile, and you tax them, well then they’ll just move next door where the tax treatment is simpler. It has to be done on a federal level,” Cuomo said on a conference call with reporters.

“I’d like to see those officials demanding that Washington do what it needs to do to help New York and the other states.”

The Partnership report found that reliance on the personal income tax in the New York Metro-Region accounted for 59 percent of all revenues — compared to 38 percent nationally, 47 percent  in Connecticut and 41 percent in New Jersey.

The group instead suggested consumption and sales taxes were a more worthy target for hikes — noting New York received a lower share of revenues from those levies than other states.

But liberal critics have long complained that sales and consumption taxes are regressive measures that hurt lower-income residents who must purchase essentials such as clothes.

The report instead pushed New York officials to urge President Trump and Congress to restore the full federal allowance for state and local tax deductions (“SALT”), which costs New York’s high earner tax filers some $15 billion in additional federal taxes annually.

It also urged New York and six other regional states to reach an agreement to suspend billions of dollars in controversial tax subsidies handed out to firms to lure jobs to their their states — exemplified by the abandoned plan for Amazon to open a new headquarters in the city in exchange for $3 billion in sweeteners.

The Partnership recommended that New York pols tackle the city’s inequitable property tax system, starting with eliminating the commercial rent tax on small and medium-sized businesses, reducing the property levy on utilities that are passed long to customers, and and creating more parity in property taxes assessments between co-ops, condo and one-and-two family homes.



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