Broken Hearted

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A group of economists is urging New York to hike taxes on its billionaires in order to address a looming budget crisis.

In a letter sent to Gov. Andrew Cuomo, a Democrat, and the state’s legislative leaders, 50 economists wrote that a wealth tax could be New York’s “saving grace” as it grapples with a $14.5 billion pandemic-induced budget deficit.

A copy of the letter was first obtained by Politico.

“More than a million New Yorkers remain unemployed,” the letter said. “Billions of dollars in budget cuts to essential services and institutions are beginning. Thousands remain ineligible for state or federal unemployment assistance. In this moment of fiscal emergency, it would be a moral and economic failure for New York’s legislature and executive to leave this money on the table.”

Although similar efforts have previously stalled in New York’s Republican-controlled state Senate – Cuomo, a three-term governor, also has a long history of opposing measures that raise taxes on the wealthy – Democrats won control of both houses of the state legislature in 2018.

The governor has also indicated recently that without additional federal aid, the state will need to raise taxes to address its current deficit, although it’s unclear who the tax hikes would affect.

Under a proposal sponsored by Jessica Ramos, a state senator from Queens, the unrealized capital gains of the state’s 118 billionaires would be taxed. It would raise an estimated $5.5 billion in revenue, which would go toward workers not eligible for unemployment benefits or federal relief measures. The proposal has already received the approval of New York Rep. Alexandria Ocasio-Cortez.

In their analysis, the economists said Ramos’ proposal would immediately generate $23.3 billion in funding for the state and would provide another $1.2 billion in each subsequent year.

Still, Cuomo has previously argued that taxes that target high earners could drive them out of the state. The state already has one of the highest tax rates for the wealthy.

But the economists dismissed that concern, claiming that “billionaires much more frequently remain residents of the localities in which they became successful. Unless Wall Street is transported to Florida, then, such fears are unfounded.”

In September, New Jersey lawmakers announced a deal to raise taxes on the state’s wealthiest individuals. The state estimates the tax increase will raise about $390 million in revenue from 16,491 state residents and 19,128 non-residents.