New York City has been the incubator for artistic, commercial and financial achievement. It has welcomed millions fleeing poverty and dictatorship around the world. It has never been in serious trouble until now.
The fiscal crisis of 1975 was a case simply of the city borrowing money to cover its operating expenses, accumulating a lot of debt when the banks stopped lending, and ultimately needed federal help to pay off its debt. Culture and commerce weren’t meaningfully affected.
Today is a different story. The city has over twice the national unemployment rate. Given the number of commercial and residential tenants who aren’t paying rent, the city will likely see a significant reduction of property-tax revenue, which accounts for more than one-third of municipal revenue. Hotels and restaurants are empty, the entertainment industry closed down. An enormous number of offices are empty because people have moved out of the city or are working from home.
Congress has been generous, allocating more than $12 billion to New York state, $6 billion to the city, $6 billion to the Metropolitan Transportation Authority, and $9 billion to the state’s schools. But that won’t be enough to bring back residents and jobs.
The state Legislature seems to believe that the revival depends on even more government spending, financed by taxing commercially successful New Yorkers. Never mind that the state already spends more per person than any state other than Alaska. The proposals to raise the personal-income, capital-gains, corporate-franchise and estate taxes won’t compel people to invest here or even to stay here. A successful person in New York pays 40% more in state and local taxes than a Floridian.
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