Experts: Taxing NY’s Wealthiest Won’t Chase Them Away
Tuesday, March 24, 2009
Albany, NY - A new study says New York’s richest residents aren’t likely to migrate from the state if their personal income taxes are raised, contrary to claims by Governor Paterson, New York Mayor Michael Bloomberg, and others. Raising taxes on the wealthy is one of the methods under consideration as Albany tries to close a budget gap estimated at $8 billion. The study, performed by the Fiscal Policy Institute (FPI), a nonpartisan research and education group, debunks the often-heard claim that the state’s richest residents will move away if their taxes are raised.
James Parrott, the FPI’s chief economist and deputy director, says the study concludes that progressive tax reform should be part of the solution.
"We just don’t see any empirical evidence that raising taxes on high-income individuals at a state level in this country – in the modest range that we’re talking about – induces wealthy people to change their location preferences; to consider or to actually move out of the state."
Researchers considered a variety of precedents, says Parrott, including a Princeton University study of what happened when neighboring New Jersey raised its top personal income tax rate to almost 9 percent in 2002.
"That study found there was no real adverse impact on the willingness of high-income people to continue living in New Jersey."
Moreover, says Parrott, New York’s current fiscal pressures largely stem from excessive tax cuts made over the last three decades.
Geri Palast, executive director of the Campaign for Fiscal Equality, which seeks to reform the state’s educational funding, says, in order to avoid harmful cuts in education spending, the legislature and the governor may finally be ready to approve a progressive tax.
"The Assembly has historically voted for this and I think they’re ready to go. I think the Senate – although they do have a slim Democratic majority – at the end of the day, will find the votes."
Governor Paterson and legislative Democrats are reported to have quietly agreed on an $8-billion, two-year tax hike on individuals making more than a $500,000 per year.
The full FPI report is available at www.fiscalpolicy.org.
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