Governor Andrew Cuomo really hates it when people leave New York, mostly because he can’t tax the heck out of them to pay for his progressive pet projects. Now he worries some of the wealthiest residents will never return to New York City. His concern is probably well-founded.
A little over a year ago, Cuomo was blaming Florida for wealthy residents fleeing his state. Darn that Florida weather and low tax rate. Because of the cap on the SALT deduction, wealthy residents who could afford it left for lower state and property taxes. Even President Trump changed his residence for tax purposes. The projected budget shortfall, as a result, was $2.3 billion.
Now Cuomo is worried because the second wave of New Yorkers is leaving:
Andrew Cuomo said he was extremely worried about New York City weathering the Covid-19 aftermath if too many of the well-heeled taxpayers who fled to second homes decide there is no need to move back.
“They are in their Hamptons homes, or Hudson Valley or Connecticut. I talk to them literally every day. I say. ‘When are you coming back? I’ll buy you a drink. I’ll cook,“ Mr Cuomo told MSNBC, naming popular getaways for the rich.
“They’re not coming back right now. And you know what else they’re thinking, if I stay there, they pay a lower income tax because they don’t pay the New York City surcharge. So, that would be a bad place if we had to go there.”
It almost looks like Cuomo is violating his own rules to get his taxpayers back. You aren’t allowed to buy a drink without a specified meal. And you can’t sit inside a restaurant in New York City if it is raining. I am not sure about inviting non-family members into your house, but this is no surprise. If Democrats didn’t have double standards, they wouldn’t have any at all.
This year, it is not just the extremely wealthy residents leaving. Others with the means to do so have also fled New York City. Between draconian lockdowns and increasing violence, who could blame them? It would appear many of these moves are permanent. According to NPR, prices in the New Jersey suburbs skyrocketed earlier this summer:
Trends often start in New York. The latest: quitting the city and moving to the suburbs.If not quite an exodus, the pandemic has sent enough New Yorkers to the exits to shake up the area’s housing market. Longtime real estate agent Susan Horowitz says she has never seen anything like it.
She describes the frantic, hypercompetitive bidding in the suburb of Montclair, N.J., as a “blood sport.”
“We are seeing 20 offers on houses. We are seeing things going 30% over the asking price. It’s kind of insane,” Horowitz says.
Cuomo should probably assume these folks are gone for good. They are buying houses. According to the CEO of Redfin, New York City isn’t the only metro experiencing this issue. And the underlying cause is not something Cuomo can fix. People are increasingly wary of living on top of one another.
New Yorkers aren’t the only big city dwellers who have been decamping for suburbs, smaller cities and rural areas. It began with the affordability crisis in cities such as San Francisco, New York and Los Angeles and has only picked up momentum during the pandemic, according to Glenn Kelman, CEO of the national online brokerage Redfin.
The effects of COVID-19 have made many people “wary of living in close quarters,” he says. On top of that, the freedom to work from home means “a huge percentage of people are now looking further afield.”
Ditching the city and buying a quiet place away from the crowds takes money. Only the relatively well-off can do it. But low interest rates could make homeownership affordable to more people for whom it has been out of reach — if they’ve maintained their income during the recession.
Kelman says the preference for single-family homes has increased nationally: Thirty-six percent of searches on Redfin in May were exclusively for single-family homes, up from 28% a year earlier.
The New York Post also reports that rents in Manhattan are dropping:
From April to June of 2019, the median Manhattan rent was $3,395 a month, according to StreetEasy. Over the same period in 2020, it was $3,300 — a 2.8 percent reduction.
Not only did 34.7 percent of all Manhattan rentals get a discount — a new high for that metric — but landlords in the borough also slashed a record 6.7 percent off asking rents. That amounts to $221 per month, or $2,652 per year.
The state is forecasting a $30 billion budget shortfall following draconian lockdowns that continue in New York City. Additional problems include 3,000 small businesses that may not survive the lockdowns. In addition, retail foot traffic in Manhattan is down 85%.
“We expected New York City to be like the rest of the country when we reopened our stores here, but it’s a complete outlier,” said Lawrence Berger, chairman of sports cap company Lids, which has a flagship in Times Square. “There is no way to make money. It’s not an economically viable situation.”
State lawmakers have proposed a genius solution to their fiscal crisis—a wealth tax for the city’s 100 billionaires. In 2019, 1% of the state’s population paid 46% of the state’s taxes. It seems even Cuomo knows this is a terrible idea:
“A single percent of New York’s population pays half of the state’s taxes,” he said, “and they’re the most mobile people on the globe.”
Instead, Cuomo wants the federal government to send billions in aid. Maybe the governor would like to consider a little belt-tightening and some common sense. Tell Mayor de Blasio to clean up and open his city. Get the violence under control now and stop the draconian rules.
As far as a little austerity, the New York State budget is notorious for paying off special interests and for pork. When you are the governor with a line-item veto, you should probably learn to use it. No state is going to come out of the last several months completely whole. And each state is responsible for developing a reasonable recovery plan.
Cuomo will need to learn to govern fewer residents and certainly fewer wealthy residents. Former New York City residents are buying homes and enrolling their children in schools outside of the city. The pandemic and subsequent riots have reinforced the downside of living in large cities as well and the failures of progressive policies. Maybe those voting with their feet will finally vote differently at the ballot box.