The High Price of Being Rich
by George Sax
Buffalo News editors wring hands over over top bracket income tax rates
There they go again! The editors of the Buffalo News, that is. In recent weeks they’ve engaged in another campaign in defense of those beleaguered unfortunates in our state, the wealthiest taxpayers. The News’ concern for what it seems to regard as an endangered class centers on the temporary tax-rate hikes on the highest earners that were enacted in June to help close the state’s large and growing budget deficit. In the newspaper’s argument this rate increase is so burdensome that New York is being depleted of millionaires and billionaires as they leave for greener pastures.
This is the second serial effort in this vein undertaken by the paper’s editors in the last five months. In May, over about a two-week span, the News ran a total of seven articles—including a guest column by Sabres owner and political sugar daddy Tom Golisano—in opposition to the proposed “Fair Share” tax, among whose sponsors was Senator Antoine Thompson from Buffalo. That series culminated in an overwrought column by Donn Esmonde decrying the virtually forced exodus of the irate Golisano and five members of a family named Bell that owned a small local manufacturing concern. “Either they shut down and ship out to growth-friendly Florida, or they risk losing everything,” Esmonde bemoaned.
How decamping to Florida, apparently to escape all income taxes—Florida has none—bore upon New York’s time-limited increase for the wealthiest was never addressed. (Nor was the topic of “growth-friendly” Florida’s bellyflopping economy, which has experienced a steeper decline than New York’s.)
Now the News has trotted out Golisano and the Bells again in support of their sound-the-alarms editorializing, possibly because it can’t come up with any other examples to illustrate its dubiously dire thesis. This time around, it’s run four editorials in about two weeks, as of last Sunday, including two back-to-back ones on September 28 and 29. You can fairly feel the editorial page editor Michael N. Vogel and company straining at the bit to say, “We warned you!”
On September 29, they told readers that “…over Governor David A. Paterson’s objections, the legislature passed a budget that added $8 billion in new taxes and fees…and the main focus…was an increase in taxes on the wealthy, which will drive even more out of the state.”
So New York’s problem seems to be that it’s leaking rich people. How many? The News didn’t say.
The previous day, it said “…a prescient few warned that wealthy New Yorkers would flee to more fiscally responsible states than remain”—sic—“where Albany would continue to pilfer from them as the recession dragged on.”
Guess who’s numbered among the “prescient few”?
The News editors reason—if that’s the right word—that because “income tax receipts so far already are some $600 million below projections,” all those exploited plutocrats must be heading for the exits. But whose projections are they referring to? Frank Mauro, the director of the liberally inclined Fiscal Policy Institute in Albany and an experienced student of state finances, notes that the News seems to be riffing on the governor’s off-the-cliff assessments, for which there don’t seem to be any adequate data yet. “We don’t know why it’s down,” Mauro said in a phone interview, speaking of tax revenues. He adds that there are no data now available from the state to indicate there’s a significant loss of tax revenue or top-bracket filers because of the temporary “Fair Share” tax, passed only four months ago.
Buffalo State College economist Ted Schmidt also is skeptical about the alleged wealth drain. “People and firms do business where they think they can make money,” he recently told Artvoice. Most of those high-end taxpayers are in the New York City area, he noted, many of them working in big investment banks, brokerages and large law firms. “These businesses don’t just pick up and leave suddenly” when there’s a downturn or a tax increase, he said.
Recent history also argues against the News’ alarmist warnings. In 2003, when New York enacted a similar three-year rate hike, the number of wealthy tax filers actually rose. And our neighbor New Jersey likewise experienced an increase in the number of such high-income filers several years ago when it raised their rates.
And yet, the News was at it again last Sunday, trumpeting its gloomy forecasts. “New Yorkers already are leaving the state…Among those departing are a disturbing number of the ‘wealthy’ ones…”
How many are in that “disturbing number” and who’s been counting? The News hasn’t said.
Almost 30 years ago, George H.W. Bush famously accused Ronald Reagan, his rival for the Republican presidential nomination, of espousing “voodoo economics” with his don’t-tax-the-rich, supply-side arguments. He later backed off this charge when Reagan offered Bush the opportunity to be his running mate. As it transpired, Bush was right the first time.
This year, the Buffalo News has too often promoted a variant of that voodoo economics, and practiced a sort of voodoo journalism.
—george saxblog comments powered by Disqus
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