Economists Arthur Laffer (the guy with the famous curve) and Stephen Moore, a leading libertarian voice for mass immigration, predict that some 800,000 people will pack up and leave California and New York over the next three years. The reason they cite for the exodus in their Wall Street Journal op-ed is that the new federal tax law, which eliminates deductions for state income taxes, will be the straw that breaks the camel’s back.
Implicit in their assignment of blame to the federal tax overhaul is that the people who will be leaving are the ones who pay taxes – the sort of folks that state and local governments rely to provide a revenue stream. As such, one would think that these would be the people whose concerns would get a lot of interest in Sacramento and Albany. But clearly that is not the case.
For the privilege of living in places like the Bay Area, Los Angeles, or New York City, you must bear some of the most ridiculous housing costs in the nation, along with crushing state and local taxes. In California, be prepared to turn over as much as 13.3 percent of your income to the state. High-earning New Yorkers fork over a more modest 8.82 percent, but if you live in the five boroughs you can tack on an additional 3.87 percent in city income taxes. California and New York also have some of the highest sales tax rates in the country at 8.54 percent and 8.49 percent respectively (and higher in many cities). And now, as Laffer and Moore point out, you can’t even deduct those costs on your federal taxes.
One might also think that for all these state and local taxes, residents could expect the most modern infrastructure, efficient public transportation, world class public schools, affordable housing, and other amenities. Ha. No, in Sacramento and Albany they prioritize an ever-growing list of public benefits and services to immigration law violators; subsidies and grants to go to college, and legal aid for illegal aliens in deportation proceedings. In New York, Gov. Andrew Cuomo is even threatening to sue the federal government (with taxpayer money, of course) for even trying to enforce immigration laws.
Some $23 billion of California taxpayers’ money and $7.5 billion of New York taxpayers’ money is expended on illegal aliens and their dependent children. For the benefit of the trolls at the Southern Poverty Law Center, the problems of California and New York cannot entirely be blamed on illegal aliens. Many, many factors have led to the middle class flight from these states. But one has to wonder why states wouldn’t want to do as much to woo their tax base into staying as they are doing to attract, protect, and reward illegal aliens.
Cutting back on benefits and protections for illegal aliens would not solve all of these states’ problems, but it certainly wouldn’t hurt. In the meantime, every U-Haul packing up a middle or upper-middle class family headed out of California and New York represents a loss of vital revenue necessary to address myriad needs of both citizens and legal immigrants.