NY confronts limits of soaking the rich as budget woes mount

NY confronts limits of soaking the rich as budget woes mount

Illustration of a the statue of liberty in front of a skyline made out of a dollar bill

Illustration: Sarah Grillo/Axios

New York’s elected officials have embraced their inner Margaret Thatcher, in explicit acknowledgment of the limits of using other people’s money to stabilize budgetary red ink.

Why it matters: Both the Big Apple and the Empire State are facing serious post-pandemic fiscal challenges. A COVID-era population exodus — many of those citizens being in the top tax bracket — is making the budget outlook increasingly grim.

However, New York’s progressive Democratic establishment — where taxing the wealthy is far more popular than it would be in, say, Texas — is taking an uncharacteristic approach to addressing the city and state’s woes.

Driving the news: At an appearance on Wall Street this week, NYC Mayor Eric Adams denounced attacks on the wealthy, adding that he needs “my high-income earners right here in this city.”

  • In a separate interview with Bloomberg, State Comptroller Thomas DiNapoli warned New York was reaching a “tipping point where we do make it economically unsustainable for enough of those folks to stay here.”
  • And the coup-de-grace came from newly elected Governor Kathy Hochul, who on Thursday vowed no new tax hikes, or budget cuts.

Zoom out: Thatcher, the former U.K. prime minister, once famously quipped that tax-and-spend policies ensured that “eventually, you run out of other people’s money.”

  • Based on their remarks this week, Adams, DiNapoli and Hochul are discovering the painful limits of capital mobility.

The bottom line: Politicians can’t rely forever on the deep pockets of those who chose to stick around, especially when faced with deteriorating quality of life, because they’ll simply go somewhere else.

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