The governor of New York, Andrew Cuomo, is backing a proposal
to provide tax relief in the state of New York to the tune of
more than $2 billion.
When people these days are in a New York state of mind, it
seems to be less about Billy Joel and more about having to pay exorbitant taxes
just for the right to exist.
There are several things to take away from this news of
Cuomo backing tax relief. The
first thing to realize is that even if this proposal passes, New York will
still be one of the highest tax states in the U.S. On top of that, New York City has a new mayor who wants to raise
taxes even more on the so-called wealthy.
There are taxes at all different levels in New York and they
are quite burdensome.
It is interesting that the governor is a hardcore Democrat. He is the son of Mario Cuomo, a
three-term governor of New York who was in office from 1983 until the end of
It is also interesting that some of the tax relief is
actually business friendly and isn’t all slanted towards the poor. While there is some typical Democratic
stuff such as a tax credit for renters, there is also a lot to like. There is a freeze on property taxes, a
big increase in the exemption for estate taxes, and several changes that are
helpful for businesses.
I think this just shows that there are some limits as to how
much taxes can be collected at the state level, even if the limits are
high. It has gotten to a point
where New York taxes and regulations are so bad that it is driving business
away and it is driving some wealthy people and high-income earners away. In the long run, Cuomo probably
realizes that it will only hurt the government if too many tax victims leave
for another state.
Unfortunately, the rules that apply to state governments do
not apply the same way to Washington DC.
The federal government is borrowing a good chunk of what it spends. It can do this because of the Federal
Reserve and its ability to create money out of thin air. The Fed simply buys the federal
government’s debt to keep interest rates low and allow the game to go on.
Washington DC may be limited in how much it can raise taxes
due to popular opinion, but it does not seem nearly as limited in how much it
can spend. Unfortunately, people
don’t perceive that inflation is a hidden tax that hurts the middle class.
State governments do not have the ability to create money
out of thin air, so they are essentially forced to maintain something close to
a balanced budget.
With this news out of New York, I wouldn’t be jumping at the
chance to live there. It is still
an extremely high-tax state and it is especially high-tax if you live in the
But it is still good news that a big-government guy like
Cuomo still feels the need to support some tax relief. I am not sure if this is due to losing
too many tax victims or if it is because of public pressure. Either way though, it is slightly
There is a limit to government at some point, even in a
place like New York where it seems that people are clamoring for big
government. At some point, markets
have to be allowed to work.