Logic Takes A Vacation

Breitbart posted an article today about the State of New York’s $2.3 billion budget shortfall. Governor Cuomo is blaming the Trump tax bill for the shortfall.

The article explains the logic:

According to Cuomo, it was Trump’s tax cut that caused “many of the state’s richest residents — who pay 46 percent of the state’s income tax — to either change their primary residence or leave New York entirely.”

…What Trump’s tax reform did was to restore fairness to the tax code, was to put an end to the injustice of all Americans — including those in the middle class — paying for the sky high tax rates in states like New York.

You see, before Trump reformed the tax code, all Americans were subsidizing the rich.

It used to be that you could write off every penny of your state income tax on your federal income tax. Trump put an end to this outrage. Here’s how it works…

In the state of New York, if you earn over $1.078 million per year, you pay an income tax to the state of almost nine percent.

In other words,  using round numbers, a New York resident who earns $10 million owes the state of New York close to $900,000 in income taxes. But…

Democrat-run states like New York knew that their rich residents would not feel the sting of that $900,000 tax bill because that $900,000 could be written off of their federal tax bill.

Basically, this was a sleazy way for Blue States to steal money from federal taxpayers, to make all of us pay for their grotesque tax rates. These Democrat-run states not only got all of this tax money, they also avoided getting voted out of office for over-taxing because the federal write-off removed most of the sting for the wealthy taxpayer.

Thankfully, Trump’s tax bill put an end to this shell game. Whereas before there was no limit on the amount of state income tax you could write off on your federal taxes, now there is a $10,000 limit. This means that the poor sap gutted for $900,000 in income taxes by New York, now eats $890,000 of it, which is as it should be.

Hey, if you’re a rich guy who thinks your taxes are too high, instead of making middle class taxpayers subsidize your ass, maybe stop voting for Democrats? Just an idea.

For those who want the rich to pay more taxes, the Trump tax plan has accomplished exactly that in New York and some other states that have excessive taxes.

The article concludes:

The truth, though, is spelled out very well by economist Marty Cantor, who laid it out for a local news outlet.

“The problems here are caused by the governor and his administration,” he told News12, “It’s too expensive to live on Long Island and in New York state. Taxes are too high, people are leaving. It has nothing to do with Trump.”

Here’s the kicker: The $10,000 write-off limit did not go into effect until  2018. So how does Cuomo explain 2017’s $4.4 billion deficit? How did the Orange Bad Man create that one?

Crickets.

Tax Policies Have Consequences

Today’s New York Post posted an article about the impact of Mayor de Blasio’s proposed tax policies.

The article reports:

Taking a page out of Barack Obama’s playbook, de Blasio casts his push for a tax hike on those earning over $500,000 as a moral imperative.

“I believe it’s time to ask the wealthy to do a little more,” he said last year. He paints taxes as a matter of giving back, as though the money was taken from others.

The article also reports New Yorkers’ response to this idea:

One friend says 10 wealthy people have told him they are leaving and another says disgusted New Yorkers bought $1 billion in residential property in Florida since the November election. The Sunshine State confers an automatic tax cut of about 12 percent because it has no city or state income tax, nor does it have an inheritance tax.

Below is the Laffer Curve. It represents the fact that there is a point where you raise taxes to the point that revenue decreases. There are many reasons for this–people find ways to shield their money from taxes, people relocate to places with lower taxes, and people make a decision to earn less so that they will be taxes less. At any rate, there is a tipping point. It remains to be seen if New York City has reached it.

English: The standard Laffer Curve

English: The standard Laffer Curve (Photo credit: Wikipedia)

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