Rick Steeves, acclaimed travel writer and host of public broadcasting's "Rick Steeves' Europe" and "Travel with Rick Steeves," often tells his audience that travel is a learning experience. I agree wholeheartedly with Steeves thesis because I always return home from my travels on behalf of NTU and its members with a much better understanding of the burdens that taxpayers are facing as a result of the policies enacted by their state governments. Unfortunately, I also learn how poorly some state governments understand tax and budget policy.
Consider my recent visit to New York. During a three day trip that took me to Brooklyn, New York City, and Albany, I learned that New Yorkers have endured or will have to endure 125 different tax hikes totaling $18.7 billion, according to an analysis by the New York Senate Minority Caucus. This figure includes $10.3 billion in tax hikes enacted in 2009 and $8.4 billion in increases proposed for FY 2010-2011. Of those proposed for the next fiscal year, $7.3 billion has been proposed as a "better choice for New York" by the Senate Leadership. Among the enacted tax hikes are a $4 billion income tax increase, a $14 million beer/wine tax increase, and a $10 million cigar tax hike. Proposed tax increases include a new $1 billion soda tax, a $340 million plastic bag tax, and a $60 million "charge" on hedge fund managers.
The number and value of these tax hikes surprised even me. New York State already has the third-highest tax burden per capita and one of the ten worst business tax climates in the nation. Yet, New York has a budget deficit of nearly $10 billion. New York's current Governor and State Senate Leadership seem to believe that they can close the budget gap by using the tired remedy of higher taxes, which already overburdened New Yorkers from Montauk to Buffalo will have to pay. Additionally, many of the taxes that the state would rely upon are notorious for failing to provide promised revenues. New York's leaders should ask the City Council of Washington D.C. about their new revenue shortfalls following increases in tobacco and bag taxes. Why New York would want to tax hedge fund managers, one of the few sources of strong economic activity in New York City, is beyond me. New York should pay heed to the lesson from Maryland, who lost residents following a recent increase in the state's millionaires tax.
The fact of the matter is that states with lower tax burdens have been able to close their deficits without resorting to higher taxes. What's more, states with lower tax burdens have been able to attract new residents and businesses, which grow the economy for the longer term. That should give New York State's leaders something to think about, considering that the state has lost two million taxpaying residents to migration since 1998. Maybe New York's Governor and Senate leadership should do some traveling of their own – to Florida, Utah, or Texas, for example – to learn about how they structure their taxes and how lower tax burdens can benefit a state.