NY Governor Andrew Cuomo has been all over the news lately, with complaints and warnings regarding a tax revenue shortfall that’s threatening his progressive agenda. He points the finger of blame (something he may or may not have learned from the Finger-Pointer-In-Chief who was our previous president) at the current administration’s tax reform package, which capped SALT deductions to $10,000 and thus dramatically curtailed a tax deduction that the 1% in high-tax states have benefited from for decades. This deduction helped offset those states’ rapacity for the money of the rich, and “softened the pain” of living there vs low-tax states.

Cuomo’s plaint is, in a shocking moment of intellectual honesty, that the new tax code is encouraging more rich people to leave NY. Given that NY’s 1% provide nearly half the state’s tax revenue, and that a great big swathe of the populace pays little to no income tax at all, it’s obvious that if even a small percentage of the state’s million-a-year earners decamp for, say, Florida and its zero state income tax, the coffers that fund the gigantic state budget ($171B, second only to California) will take a significant hit.

The matter is so alarming to this scion of a progressive legend that he traveled, hat-in-hand, to DC to meet with Trump and beg for tax relief. Trump apparently suggested he might be open to the idea (I’m not holding my breath) but then took the opportunity to roast Cuomo over his late-term abortion bill.

Meanwhile, Cuomo is fighting tooth-and-nail to save the deal he made to bring Amazon to New York City, a deal that includes $3B in tax incentives, one he insists will be a net positive in tax revenue, and one that he’s catching heat on from the Left.

It’s a twin-barreled admission that taxes matter, and that taxation alters behavior. This bit of obviousness is something that progressives have worked mightily to ignore when it comes to squeezing the rich for every cent they can wring (arguments run to: “it’s NY City, they live here because it’s so awesome and don’t mind the taxes”), but simultaneously embrace when it comes to altering the behavior of the peons they pretend to champion (see: tobacco and soda taxes).

Success-guilt is another gimmick they apply in order to try and, as Jean-Baptiste Colbert observed, “[pluck] the goose as to procure the largest quantity of feathers with the least possible amount of hissing.” Thus, Obama’s “at some point you’ve made enough money” (practice what you preach, Mr. President). Thus, Warren’s “you didn’t build that.” Thus, Bill Gates’ recent scolding that he’s been allowed to keep too much of his wealth (why are you putting it into a foundation instead of writing a check to the Treasury, Mr. Gates?), and his arrogant assertion that inheritance taxes should be higher (nice of you to decree upon everyone else). By convincing the wealthy to feel guilty about their success (in the sage words of Michael Corleone, “this contempt for money is just another trick of the rich to keep the poor without it”), they can increase the pluck-to-hissing ratio.

Lost, or more likely ignored, in all this is the hard lesson of Hauser’s Law, which notes that, no matter the structure or marginal rates of the tax code, tax revenue has held at a long-term steady-state average of just under 20% of GDP since WWII. This tells us that people do indeed alter their behaviors in response to changes in taxation, something that greedy big-tax politicians have pretended is not true (or ignored because they’ve convinced enough voters it’s not true) for decades.

Sometimes, though, the smack of a cold, wet reality fish across the face simply cannot be ignored, so instead of ignoring the obvious, the big-tax politicians look to deflect blame onto others. New York State spends nearly twice as much per-capita (note that this spending does not include NYC’s $89B per year) as more-progressive-than-thou California, and yet that’s not enough, apparently. It has risen from $144B in 2015 to $150B in 2016 to $163B in 2017, to $168B in 2018, to this year’s $171B. Now, he’s in a panic because millionaires are leaving. But, instead of address either spending or the economic malaise that’s hampering revenue generation of other sorts, he rails against the Feds’ interference in his plucking, and attempts to improve economic matters by picking and choosing who should be given relief from the state’s onerous taxation. Meanwhile, one obvious path to economic improvement, especially in the depressed Southern Tier section of upstate NY, would be to finally lift the ban on fracking of the Marcellus Shale on the NY side of the NY-PA border (Pennsylvania is reaping a windfall in jobs and revenues from drill, baby, drill). But, that would clash with his progressive bona fides in a season where anyone with Presidential aspirations (and, boy, oh boy, does he have those) must be “greener than thou.”

One of the great disconnects in progressive philosophy lies in the desire to build a society that’s mirrors the Europeans’ cradle-to-grave entitlement state without copying European-style taxation, which imposes a FAR, FAR heavier tax burden on the working and middle classes than America does. If the gaggle of Presidential hopefuls, all of whom are touting socialized medicine and free-everything, are aware that you can’t give like Europe if you don’t tax like Europe (Europe’s Value-Added Taxes are how they avoid the Hauser’s Law matter), they’re keeping it to themselves. After all, the Left’s message is that “we will do all this good stuff for you by making someone else pay for it,” and if the truth that free stuff isn’t free comes out, they may lose a lot of those “gimme stuff” voters.

Rather than try to rein in spending and curtail the punitive taxation that’s causing millionaire flight, Cuomo rails against having his ability to maximize the plucking of his geese hampered.

This is the sound of the world’s smallest violin, playing a sad song just for him.

Peter Venetoklis

About Peter Venetoklis

I am twice-retired, a former rocket engineer and a former small business owner. At the very least, it makes for interesting party conversation. I'm also a life-long libertarian, I engage in an expanse of entertainments, and I squabble for sport.

Nowadays, I spend a good bit of my time arguing politics and editing this website.


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