You can tax people to a certain level until they revolt and look for alternatives to paying exorbitant taxes. We have been seeing this in high-tax states ever since President Trump signed the Tax Cuts and Jobs Act and instituted “S.A.L.T.” which limited the deductions high-income individuals could deduct off their federal income taxes. This action is causing a mass exodus from New York and New Jersey to Florida. Besides individuals moving, there is now evidence that business are migrating out of New York to enjoy the low taxes and low expenses of Florida. To rub salt into the wound (sorry, couldn’t resist the pun) politicians are doing the opposite of what they should do to stop the financial bleeding — raising taxes on high-income earners.
New Jersey recently passed a 10.75 percent income tax on those earning $1 million or more (this tax rate used to be reserved for those earning $5 million or more). The state expects to raise around $400 million with this increase, though they are not taking into account those who will leave the state for low-tax states like Florida.
Now, the State of New York which is facing a $15 billion budget deficit and is looking to shore up additional money through a new tax on the wealthy in the state. While Governor Cuomo is not supportive of such a measure for fear of losing numerous high earning individuals, many are looking to get such a bill passed. Currently, 36 percent of the taxes are paid by the top one percent income earners in the state, and in New York City that number rises to about 46 percent of the city’s taxes are paid by top earners.
Appearing this morning on CNBC, Operation Hope founder, John Hope Bryant, speaking on the proposed New York wealth tax hike, he equates forced taxation on high-income earners as philanthropy.
“If you’re making $75,000 as an individual, $150,000 as a family, you are going to get $500, you are going to get a cash rebate, I believe it is. So if you have any kind of philanthropic or patriotic heart, and you make over $1 million or $5 million you are going to see anywhere from $18,000 to $40,000 increase in your [state income] tax bill, that is cheap philanthropy, that is a good deal.” – John Hope Bryant