Note to America: Pay attention to the collapse of New York. The willful destruction of our nation’s greatest city is not an accident; it is not an unhappy misfortune caused by COVID-19. Rather, it is the cumulative effect of progressive policies that may soon wash up on your shores, in your town, and that can undermine the neighborhood you love.
New York’s ultra-liberal legislators may have just delivered a death blow to a city already in decline by once again hiking taxes on the wealthy, producing a tax regimen that is the most punitive in the country for those paying the bills.
All in, New York City’s highest earners will now pay a marginal tax rate of 52 percent; it could go higher if President Biden succeeds in raising the federal income tax rate.
This tax increase comes at a time when New York City and State are already bleeding residents. Since 2010, New York has lost 1.4 million people; in the past year the number is over 100,000, the largest population decline of any state.
That exodus has real-life political and economic implications; New York will soon lose one seat in the House of Representatives; it could lose two. You might think that would wake up its legislators.
The folks departing are mostly leaving from the state’s wealthiest zip codes; those high earners keep New York afloat. (The top 2 percent pay fully half of New York’s income taxes.) Mayor Bill de Blasio doesn’t seem to care; last summer he told well-heeled New Yorkers in no uncertain terms that he couldn’t care less about their complaints about the city, all but pushing them out the door.
New Yorkers are not leaving because of bad weather, which was the absurd excuse given by Gov. Andrew Cuomo not so long ago. Surveys show the mass departures are due to New York’s exorbitant cost of living, rising crime and – number one – impossibly high taxes.
This is not good for the state’s businesses or workers. Facebook reports that New York is tied with Pennsylvania for allowing the largest percentage of small businesses – 31 percent – to go under over the past year. Who can be surprised? New York’s labor and tax policies make it the 49th worst state to do business in; the state has the fifth highest cost of living and is rapidly losing the customers that kept those small firms alive.
New York State legislators do not have to raise taxes again. Thanks to the recently-passed American Rescue Plan, New York’s yawning budget hole was plugged by largesse from Uncle Sam.
Hiking taxes gratuitously has always been a risky strategy, but today it is suicidal. Because of COVID-19, things have changed, perhaps forever.
Over the past year, many businesses have allowed their employees to work from home. For the most part, productivity has been excellent; many workers have enjoyed their new-found freedom, moving out of town to the suburbs or to other states.
Employers know this, which is why some companies have begun to open satellite offices outside the city and even in different states. They want top talent, and know that for many young people, a year outside of Manhattan has been an eye-opener.
Plus, given the soaring cost of city real estate, businesses were already trying to figure out how to reduce their expensive footprint.
To be sure, come September, many Wall Street firms will ask their employees to return to the office. The industry functions on an apprenticeship model, a process which does not work well remotely.
But most firms are discussing requiring attendance fewer than five days a week, which would encourage many to stay in the suburbs. Especially since during the past few years another blight has descended on the city: increased street crime, homelessness and a declining quality of life.
New York is dirty and increasingly unsafe. Thieves roam once-glamorous Madison Avenue, where dozens of storefronts remain empty; in broad daylight they loot designer stores like Michael Kors, which was robbed just a couple of weeks ago. Homeless people threaten passers-by; diners are hectored and sometimes robbed while eating outside.
The cops appear in retreat; you can hardly blame them. What’s the point of locking up criminals if, under the state’s recently-approved bail reform law, they will be sprung a minute later?
Why should the rest of the country care about New York? Because New York is not alone. Other great cities, including San Francisco, Seattle and Portland, are similarly in rapid decline, all led by far-left ideologues.
Progressives like de Blasio have seemingly taken hold of the Democratic Party, attracting young people who do not recognize what anti-business, tax-the-rich, anti-cop policies can do to their communities. New York’s demise should be instructive.
New York teems with brilliant people who have gone on with their lives even as their city has fallen apart around them. The city’s residents, who not long ago enjoyed a prosperous and safe community, could not imagine that elected officials would let the city fall into disrepair in the name of “social justice” or other progressive fancies.
When Rep. Alexandria Ocasio-Cortez (D-N.Y.) drove Amazon and its promised 25,000 jobs away from New York, they should have looked up from their daily pursuits. When legislators passed bail reform that made a joke of law enforcement and their destructive mayor cut police funding, they should have marched on City Hall.
At the very least, they should have voted. Bill de Blasio was reelected mayor in 2016 by only 8.5 percent of New Yorkers.
Instead, they moved to Florida.
Liz Peek is a former partner of major bracket Wall Street firm Wertheim & Company. Follow her on Twitter @lizpeek.