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 1994.
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 city.
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 encouraging.
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.