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New York's record decline in residents has lawmakers debating high tax rates

A for sale sign is displayed in front of a house in Westwood, Mass. Home prices hit a new record in October as the number of homes for sale hit an all-time low.
New Yorkers leaving the state are putting homes on the market.

New York lost a record number of people to outmigration -- over 350,000 during the pandemic. While the numbers, supplied by the U.S. Census Bureau, are not in question, the reasons for what’s come to be known as the exodus from the state remain in dispute.

The population decline, first reported in December, is the largest number of people moving out of the state since New York City’s fiscal crisis in the 1970s. It comes on top of a steady decline in population compared to other states, and will result in New York losing another congressional seat when the new districts are designed later this winter.

Gov. Kathy Hochul, in her State of the State message, on Jan. 5, expressed concern.

“That’s the steepest population drop of any state in the nation,” said Hochul, who called it “an alarm bell that cannot be ignored.”

Hochul said the array of new programs she is proposing in her budget will draw some New Yorkers back, including money to combat gun violence and reduce homelessness, subsidies for child care, and a $2 billion property tax rebate.

“We are going to jump-start our economic recovery by being the most business-friendly and worker-friendly state in the nation,” Hochul said.

But there’s been debate over whether the state can be business-friendly when it has some of the highest-in-the-nation income, property, and corporate taxes in the country.

Last April, the state, driven by progressive Democrats in the Legislature, created new, higher income tax brackets on multi-millionaires, and raised corporate taxes.

Hochul’s predecessor, former Gov. Andrew Cuomo, who resigned in August, often expressed doubts about whether the higher taxes caused wealthy individuals to leave the state.

State Budget Director Robert Mujica, when he served under Cuomo, echoed the former governor’s reservations. But when Mujica, who now works under Hochul, was asked about it after the budget address, Mujica said he does not think the higher taxes have led any wealthy people to leave New York.

“We haven’t seen any evidence of that,” Mujica said.

Mujica said the changes to the national tax code, known as SALT, bear more of the blame. The changes prevent high-income earners from deducting their state and local taxes from their federal taxes above a certain threshold.

Michael Kink with the progressive group Strong Economy for All, which pushed hard for the tax increases, said he finally feels vindicated.

“There’s been this continual insistence on repeating the ‘myth of the moving millionaire,’” said Kink, who added that the “myth” has not been substantiated by data.

Kink said higher taxes actually increase the state’s attractiveness, because more government programs can be created and funded to support residents, such as adequate public school funding and aid to college students, among other things.

“The budget shows that last year’s tax increases on the rich and big corporations were really successful,” Kink said. “They brought in a bunch more revenue, and we are using that money for public investments.”

Republicans in the Legislature disagree. Sen. Tom O’Mara led a news conference where GOP lawmakers laid out plans for drawing more people back to the state. He said SALT would not be adversely affecting so many New Yorkers if their property taxes weren’t high to begin with.

“If New York state taxes weren’t so damn high, SALT wouldn’t have that impact that it’s having,” O’Mara said.

O’Mara said the 350,000 people who left the state are not all wealthy enough to be affected by SALT, which allows property tax deductions up to $10,000.

Sen. Dan Stec, who represents portions of the North Country, said it’s not just about the wealthy potentially being driven out of the state. He said the state’s gas and home heating oil taxes are high, compared to other states. He said the increased costs can be as much as $500 per household in his district.

“They will be choosing between heating their homes, driving to work, and feeding their kids, putting food on the table, taking their kids to doctors’ appointments, educating their kids,” Stec said.

Stec also said anti-climate change proposals, including a carbon tax, are potentially costly, as is Hochul’s proposal to ban natural gas hookups in all new buildings in New York.

The GOP lawmakers said the rising crime rate and increased gun violence are also driving people away, and they said a law that ends most forms of cash bail must be repealed.

Others say the state’s migration is temporary, and directly related to the nearly two years of the COVID-19 pandemic and related economic shutdowns. Mujica said the shutdown of entertainment and restaurants in New York City may have led some to leave for a time.

“As COVID goes away, or we figure out how to live with it, all of the reasons that people live in New York City come back,” Mujica said. “And then people will still want to live there.”

He said the region’s real estate market is strengthening, and rentals and the sale of condominium homes are higher than pre-pandemic levels.