As the wealthy flee New York, poorest will be most affected




As the wealthy flee New York, poorest will be most affected


Are you a young person thinking of moving to a happening city? Chances are New York is not even on your list of potential hotspots, and if you are already living there, then you are looking for a way out. The last dividends of 20 years of leadership under Rudy Giuliani and Michael Bloomberg are being squandered by well intentioned but increasingly radical policies.

Dragging business practices, skyrocketing taxes, telecommuting, and loss of special status is a toxic mix for New York. Among young people, New York is becoming passe. During recent years, both the city and the state of New York have lost residents, as waves of educated and high earning millennials have fled. In fact, more than 46 percent of New Yorkers of all ages moving out of the state are in the bracket earning above $150,000.

The Empire State budget is in near freefall, in no small part due to lower revenue from middle class and upper class workers, while growing stateslike Texas and Florida are in surplus. Governor Andrew Cuomo noted a $2.3 billion hole in the state budget earlier this year, caused largely by oppressive policies that have gutted the local population and economy. More than 450,000 people moved out of New York in the last year alone.


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In the Big Apple, the tax burden onhigh earners is onerous. The local government relies solely on the top 10 percent for over 70 percent of taxes, with the top 1 percent paying more than the bottom 90 percent combined. Any efforts to assist the most needy individuals are heavily dependent on the city keeping its reputation as a driver of the national economy. The accelerating outflow of middle class and upper class residents will no doubt tarnish that. As steep declines in revenue hit, spending cuts will burden the urban poor rather than the bureaucrats.

The current spending levels are likely unsustainable for the Big Apple in the long term. The New York City Council passed a $93 billion budget, which includes spending hikes of 6 percent for salaries, 9 percent for other employee benefits, 9 percent for debt service, 11 percent for health insurance, 12 percent for public assistance funding, and more. This local budget also set aside a new line item for taxpayer funded abortions, an army of new social workers, and even a package for the Green New Deal.

If New York continues to lose taxpayers in droves, the city will not be able to fund its current initiatives, let alone new spending increases. As the exodus further dwindles local revenue, public programs will eventually require massive cuts. Meanwhile, increased pension spending will eat up any slack the city has left. The pension plans are already underfunded to the tune of tens of billions of dollars. Retirement spending comprises nearly a quarter of the annual budget and will only continue growing.

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Whenever push came to shove in the past, cities like Chicago and Detroit prioritized bureaucratic spending and honoring pensions over funding public programs and infrastructure. If New York takes a similar route, the people most dependent on campaign promises will be left behind. The Big Apple has been down this path before with the struggling economy and massive spending hikes of the 1970s. New York leaders overpromised and underdelivered, while moderate mayors like Fiorello La Guardia were unfortunately replaced by increasingly radical or incompetent politicians.

The city even went so far as to request a bailout from Washington, leading to the infamous “Drop Dead” moment of President Gerald Ford in 1975. New York cut down the number of cops on the street and teachers in the classrooms, while raising subway fares and tuition for the first time in the history of the City University of New York. The rate of residents leaving spiked, as did crime, with many recalling 1980 as the worst year for it.


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The problems that plagued New York decades ago are lessons for the city today. A hollowing out of its local revenue and intellectual base will lead to fiscal disaster that will hurt the urban poor hardest. Those very same wealthy people that politicians have demonized to gain votes are the actual linchpins for the spending largesse of progressives. Once high earners are gone, soon followed by middle class taxpayers, the promises of democratic socialism by Mayor Bill De Blasio will also vanish. Many of those remaining in New York will be those without the means to leave.

There are no destinies of cities. Our grand metropolitan centers have no guarantee of continuing their reputation as a trendy centers. Great food, public transportation, and cultural activities are now available across the nation. Suddenly that shoebox apartment in the Upper East Side is not as hip as you once told your friends. The spacious cheaper place in Austin or Atlanta or Nashville is. New York politicians continue making promises to their most vulnerable citizens with cash that will soon be in another state.


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Moving from New York to Florida saves much more than just taxes


There is perhaps no larger chasm in policy results than the one between New York and Florida. The poorly managed Empire State and misguided left wing policies have caused its population to decline faster than any state in the nation last year, while serving as a model of caution for the remainder of the country. The Sunshine State, on the other hand, has seen its population more than double since 1990. Is also the top destination for former New Yorkers. Thanks to its judicious use of tax dollars and wealth of resources, Florida is now the third most populous state in the nation.

New York and Florida are similar in size, population, and racial profiles. Each attracts plenty of immigrants. But years of mismanagement in New York has wreaked havoc on its residents. Imagine you are well into your 50s and have worked in New York for several decades. It is now time to consider your retirement. Individuals planning their golden years have to consider how far their hard earned dollars will go. Staying in New York and shelling out tens of thousands of dollars annually may no longer be viable. Serial abuses of policy, spending, and taxation have left thousands of citizens with the same decision to stay in New York or move to Florida.


Much of this thought experiment combines tax rates and a little back of the envelope math, so bear with me as we look into the fictional life of David Uhall. His name reminds Albany of the thousands of New Yorkers leaving each year due to profligate state taxes and costs of living. This ongoing exodus could even force New York to lose seats in Congress and send residents to low tax jurisdictions such as Florida.

Now for some ground rules for Uhall. He is 55 years old, single, healthy, and earns $100,000 after deductions as an accountant. He is thinking of moving from his apartment in Brooklyn to a condominium in Miami. He expects to spend about $10,000 in disposable income and owns a car. If Uhall rents a dedicated parking space, that adds an extra $5,000 each year in New York, where the average monthly price of parking clocks in at over $400. The price of parking in Miami? Just $25 annually for a permit. Moreover, the proposed congestion pricing in a daily commute to his office in lower Manhattan adds over $4,000 to his total annual expenses.


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Factoring in costs of living could mean that the $100,000 salary would go much further outside the Empire State. After inflation and relative costs, that amount would be equivalent to only $87,000. In Florida, the same $100,000 is worth roughly $101,000. Tally up the totals and it is easy to understand why so many people flee New York for Florida, especially as they enter peak earning years and think about retirement. Private sector pensions and 401(k) plans are taxable in New York, meaning Uhall would be on the hook for thousands each year on top of higher costs of living.

Florida opened its doors for tax refugees, and residents have come. New York still has not learned and wrings out any additional tax dollars it can find for its soaring deficit. State tax collectors actually conduct 3,000 nonresidency audits a year to make sure high earners who leave cannot escape without a bill from Albany. State officials check phone messages, social media posts, dentist bills, and even the inside of kitchen fridges to make sure that fleeing residents do not cheat the governor out of a nickel.

At the end of the day, the price of staying in New York is nearly double that of a temperate place geared toward the lifestyle of older Americans. Plus, there is no loss in culture or cuisine in moving to Miami or West Palm Beach, with the amenities of modern life available for the thousands of residents who are making the jump from New York to Florida each year.

The final consideration facing our hypothetical New Yorker is that moving truck rentals from blue states to red states are much more expensive than vice versa due to high demand. With the bevy of lower taxes and costs of living, perhaps this is the one cost that Uhall is willing to pay to start his new life in sunny Florida. Residents vote for the government they want. As years of corruption and mismanagement compound in New York, the next most important vote for its citizens will not be at the ballot box. It will be behind the wheel of a moving truck headed down to the Sunshine State.


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