— Steve’s Marketplace —
Editor’s note: Contributing columnist, Steve Nicklas, expresses his views and insight on various topics in Marketplace.
The Big Apple has suffered a vicious bite from Covid-19, with restaurants and theaters and stores getting swallowed up in the assault. As the damage is digested, New York City residents pack up and flee, in droves.
Many will move to low-tax states with fewer rules and less congestion, like Florida. The reasons for living in the city – the Broadway shows and the trendy shops and the cutting-edge eateries – are gone, for a while. And a disturbing element of unchecked crime has developed.
The virus has had a way of exposing financial and economic and societal flaws in cities and states. And poor leadership. The virus has also accelerated trends, like working remotely instead of in small office spaces with big rents.
So what does inferior Mayor Bill De Blasio do, as New York City hemorrhages – he pushes for more taxes on the beleaguered businesses and residents. While Florida has no state income tax, New York City has layers upon layers. And De Blasio is talking about taxing the uber-wealthy, corporations, inheritances even more. He calls these reforms to “address the staggering levels of income inequality.”
The potential tax increases could be too much. “For many New Yorkers, taking into account the high rates of state and local tax they endure, and the inability to deduct those taxes for federal purposes, the effective ‘all-in’ tax rate would be about 74 percent,” said Robert Willens, a New York tax analyst.
And you wonder why NYC residents are fleeing? Storage boxes and moving vans are commonplace on otherwise empty city streets. The interest in leaving the Big Apple has doubled over last year, according to United Van Lines. “Everybody’s leaving,” says one New York City real estate professional.
Not everyone bailing on New York City is going far. New property listings in suburban New Jersey and upstate New York regularly get 20 offers within a day.
Governors and mayors in New York and New Jersey and Massachusetts have strangled their economies with fear mongering and draconian lock downs, which continue even now. In contrast, southern states reopened quicker than northern states after the national shutdown in April. New York City is still locked down in a lot of ways, with only hints of reopening (look at live shots of the city’s once-bustling streets).
Meanwhile, Florida’s population and growth are spiking like the summer temperatures. The exodus from northern states brings a steady influx of wealthy new residents, especially around Nassau County, FL. Our population is projected to double over the next 20 or 30 years; in contrast, northern states battle a shrinking population – and tax base.
And we embrace tourism from northern states here, which also feeds our growth. While our tourism has been cut in half by the virus, New York City’s is almost non-existent. State leaders even threaten to quarantine visitors from some states for 14 days.
It’s partly due to a liberal mantra to redistribute wealth, from strong hands to weak hands. Tax the rich. Give it to the poor. The problem is the rich pick up and move once a state or city adopts such a “progressive” stance.
Look at California also. Residents there are bolting for popular destinations like Las Vegas, Dallas, Phoenix. So many are leaving that California officials may try to tax residents even after they move away. Sort of a legacy tax?
Talking about pushing people away. And in this case, it would be chasing them even after they have gone away. For even more taxes. Maybe NYC could embrace this idea.
Steve Nicklas is a financial advisor for a major brokerage firm who lives and works on Amelia Island. He is also an award-winning columnist. His columns appear regularly in several newspapers in North Florida and South Georgia, and on his website: www.SteveNicklasMarketplace.com. He has also published a book, “All About Money,” consisting of his favorite columns over the past 20 years. The book is available at local stores and on Amazon. He can be reached at 904-753-0236 or at [email protected].