by Laura Clawson
As David Nir wrote the other day,
New Yorkers overwhelmingly support a tax on millionaires. But New York Gov. Andrew Cuomo
says that doesn't matter; he's not going to renew a tax surcharge on millionaires. No, Cuomo is taking what he'd like us to see as a brave stand:
“The fact that everybody wants it, that doesn’t mean all that much,” he said in a news conference. “I represent the people. Their opinion matters, but I’m not going to go back and forth with the political winds.”
Mr. Cuomo insisted that under no circumstances would he consider backing the extension of the surcharge, saying it would encourage residents and businesses to move to other states. He said he would support a federal millionaires’ tax, because it would treat residents of all states equally.
It's hard to argue with the contention that sometimes politicians should just do what's right, damn the polls. However, it's easy to argue with Cuomo's contention that the tax would actually disadvantage New York as millionaires left the state. The Center on Budget and Policy Priorities rounds up the evidence that
tax flight is a myth. Not only are non-tax factors like housing prices and public services important in people's decisions about where to move, or move away from, but:
Recent research shows income tax increases cause little or no interstate migration. Perhaps the most carefully designed study to date on this issue concerned the potential migration impact of New Jersey’s 2004 tax increase on filers with incomes exceeding $500,000. It found that while the net out-migration rate of this income group accelerated after the tax increase went into effect, so did the net out-migration rate of filers with incomes between $200,000 and $500,000, and by virtually the same amount. At most, the authors estimated, 70 tax filers earning more than $500,000 might have left New Jersey between 2004 and 2007 because of the tax increase, costing the state an estimated $16.4 million in tax revenue. The revenue gain from the tax increase over those years was an estimated $3.77 billion, meaning that out-migration — if there was any at all — reduced the estimated revenue gain from the tax increase by a mere 0.4 percent.
Cuomo is opposing a surcharge that would affect income over $1 million per year, which would raise $2.8 billion in the coming fiscal year—just the right amount to plug a projected $2.4 billion budget shortfall. From fiscal year 2011 to fiscal year 2012, New York reduced its per-student
school spending by 7.2 percent (PDF).
moreThe operative word being "renew," meaning the tax is already in place.
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