Sunday, March 29, 2009

New York's Massive Tax Increase

New York State has just implemented the dumbest idea since the Lead Balloon.  Rather than address the massive size of the State's services, employees, and pensions the State took the easy way out - they raised income taxes on the "Rich" - those earning $300k per year or more.

(Here's a fun fact to know:  I moved from New York to Florida primarily because of New York's onerous tax policy - that was the end of their revenues from me.  I made less money in Florida, but after taxes and other "New York" expenses, I was better off financially.  People vote with their feet.  They can move, or worse, NOT MOVE (and shake), being disincentivized from killing themselves to pay more taxes.)

People, ALL people, have an intense sense of fairness.  ALL people includes people who work VERY hard and make over $300k per year (defined as rich in New York).  No one, and I mean NO ONE, thinks that a tax bill of 50% of one's income is acceptable - while nearly EVERYONE seems to think 33% is perfectly reasonable, and this ratio seems to hold the world over.  For earners in the high tax states, the new Obama tax rates, along with state income taxes and FICA, total taxes on income will be roughly 50%.  Why is it so HARD for the liberal establishment to accept this simple metric?  Look, if you are worried about concentration of wealth... why not some confiscatory provision for net worth in excess of some ridiculous number - say $100 million?  I will tell you why:  Firstly, it won't raise enough money; and secondly it would destroy incentive to build the very corporations that are the backbone of the current confiscatory tax and destroy system now in place.  Liberals HATE business... but where, exactly, do they believe the revenues come from to fund all of their silly programs?

New York, California, Mass., and the rest of the Communist Manifesto states will be forced to renegotiate the sweetheart pension deals they gave their government workers, and renegotiate the compensation of the current government workers.  If they do not, they risk a political crisis that might well end up with serious civil unrest - and depending on the use of ORGANIZED VIOLENCE (Law Enforcement) to stop CIVIL VIOLENCE sort of defeats the purpose, no?

Earth to Governor Paterson and the rest of the Albany contingency:  This brain dead move will bring New York to default on their municipal bonds (absent a Federal Bailout) within the decade, and maybe much sooner.  

You heard it here first.

Mentatt (at) yahoo (d0t) com

8 comments:

gregoryw said...

Moving to Florida won't be enough soon. You'd have to leave the country a la Jim Rogers.

A Quaker in a Strange Land said...

Perhaps.

But it was enough to increase me take home pay over 15%.

Besides, I like the weather and the beach... though I do miss New York. If, while you are young and single, you can live in New York City... even if just for a couple years... Nothing like it...

bureaucrat said...

The Republicans/Libertarians (and Jeffers is one, whether he pretends he is or not) have run out of enemies to throw the government dollars at. First it was the Russians, then it was Al Qaida, then it was the Iraqis, then it was/is the Afghanis (more Al Qaida), and now, with the whole pool of enemies drying up, they are focusing on the government employees. Republicans/Libertarians need the U.S. to be in a state of war with somebody 24/7, so they can increase spending on fighting an enemy and pillage the public purse at the same time (all the children of Republicans who went to rebuild Iraq comes to mind). Unlike many organizations, Federal employees are not the biggest line item in the Federal budget, and I'll guess that might be true of the state governments as well. A good chunk of the Federal budget goes to wealthy people (the biggest social security payments, Treasuries interest, defense spending), not to us awful, wasteful government employees. You'll likely get your wish -- I could lose a very generous pension in 2024 -- but it won't help your cause very much. You'll need a new enemy. ;)

A Quaker in a Strange Land said...

Bureaucrat:

Taxpayers accept a 33% income tax rate, and reject a 50% tax rate. This is a metric with a great deal of empirical support.

The rest is just NOISE.

bureaucrat said...

Don't forget to add in that the Federal tax system and most state systems (not Illinois, which is still at one rate) are PROGRESSIVE tax systems. No tax on the first $12,000 or whatever in income, and then 15% on the next $30,000, etc. You aren't paying the full 33% on ALL your income, just on the higher income dollars. 33% doesn't start to kick in until you've earned at least $100,000 or whatever. Lotta tax, to be sure, but then again, everyone wants those programs ...

gregoryw said...

Don't we already live with a 50% tax rate?

25% to the feds, 6% to many states, 9% for FICA and medicare which is spent in the general fund, and then 8% sales tax. Add up the other tarriffs and gotchas, it's easily 50%.

bureaucrat said...

At $94K salary, my effective Federal tax rate is 11% (rental property deductions, etc.), I pay less than 3% to the states, 8.65% to social, and I only pay 9% sales tax on stuff I actually buy (and 2% sales tax on food and drugs). I also get lots of nice services in return (not to mention, I get paid :) ).

A Quaker in a Strange Land said...

Yes, we have an effective tax rate above 50% if you live in an income tax state when you add it all up.

And, yes, people the world over object to tax rates above 33% and seem to go through some intense gyrations when governments try to confiscate more.

More on this in my next post.