How the GOP tax plan could exacerbate New York’s stagnant population growth
How the GOP tax plan could exacerbate New York’s stagnant population growth
Florida is the home of Disney World, hanging chads and, increasingly, a large portion of New York’s departing population.
With the new federal tax plan, New York’s population woes may only get worse.
New York’s population increased by just 13,113 between 2016 and 2017, according to recent U.S. Census Bureau figures, bringing the population to 19,849,399.
The country’s three largest states – California, Texas and Florida – far outpaced New York in numeric growth over the past year, gaining hundreds of thousands in each state. While Florida grew by 1.6 percent, one of the highest rates in the nation, New York only grew by 0.1 percent, according to the Program on Applied Demographics at Cornell University. If the state’s population growth continues to lag, it could even lose one of its 27 congressional seats in the 2022 reapportionment.
The state’s track record is worse when it comes to net migration. Excluding births and deaths, fewer people are immigrating to New York than are leaving it to go to other states – namely, to the ever-growing Sunshine State, according to census data. Although New York attracted the third-largest number of international migrants, behind Texas and California, the state still had a net migration loss of 190,503 residents.
The large inflow of international migration to New York, which is largely responsible for population growth, could also be behind the outflow of residents, according to Jan Vink, an associate at the Program on Applied Demographics at Cornell.
“Most of the people from abroad move to New York City, most people that leave the state came out of New York City, and it's partly the same group,” Vink said. Often, after migrants become settled and perhaps begin families, they will move to surrounding states.
Retirees are also common defectors from New York, which Vink said has affected the upstate area. E.J. McMahon, research director with the Empire Center for Public Policy, noted that this retiree migration was likely the reason why Florida is the leading destination state for New York residents.
McMahon hypothesized that many upstate counties are also losing population due to lack of economic opportunity, which is further reflected in the shrinkage in upstate labor force. “The entire decline in unemployment in upstate New York since the recession is occurring because there's fewer people seeking work,” he said.
Rep. Tom Reed, a Republican who represents areas of western New York, said that his district had been hurt by population loss caused by high state taxes and lack of employment opportunities. “I've heard that story a million times told across the district, about parents moving to see their kids because the kids couldn't get a job here,” he said.
Downstate, population loss is driven by high living costs. According to McMahon, that’s why the second leading destination for New Yorkers is New Jersey.
“I think you have people who are lower income or rising blue collar workers who can find a better apartment in north Jersey, a nicer apartment that they can afford,” McMahon said. “And you have people who are more affluent who are middle or upper middle class – rising young professionals, say – who want to move to the suburbs, and the suburb that's most affordable is in north Jersey.”
The high cost of living downstate is about to become higher, thanks to sweeping federal tax changes, and more people may flee the state as a result. The tax overhaul signed by President Donald Trump on Dec. 22 caps the state and local tax deduction at $10,000. Many New Yorkers used this deduction to write off their income and property taxes – Nassau County, Rockland County and Westchester County have the highest median property taxes in the country. Five New York Republicans in the House voted against the bill in part because of this provision, and Gov. Andrew Cuomo signed an executive order on Friday allowing New Yorkers to prepay their property taxes to circumvent its effects for the coming year.
McMahon said that the cap would make the state – and New York City in particular – less appealing for wealthy residents, and for high earners considering moving to the city.
“There will be some small, difficult number to measure in additional out-migrants in higher income groups,” he said about the new tax system’s effect on New York’s population. “I've talked to three different people in the last three days who have very high income who say, ‘Okay, that's my number, I'm planning to go to Florida.’”
“I've talked to three different people in the last three days who have very high income who say, ‘Okay, that's my number, I'm planning to go to Florida.’” – E.J. McMahon, research director at the Empire Center for Public Policy
However, McMahon said that while even more retirees could leave the state, it would be difficult for business owners to relocate. For the majority of middle class and upper middle class residents, the decision to leave or stay depends on how the state government reacts to the tax overhaul.
Reed, who helped to orchestrate the compromise to keep the scaled-back SALT deduction in the tax plan, defended the cap.
“I fought to keep a state and local tax deduction, because the reality of the situation about a year ago became clear to me that they were going to eliminate it in its entirety,” said Reed, who sits on the influential House Ways and Means Committee. He explained that he wanted to “protect as much as possible” in crafting a compromise to keep the income and property tax deduction up to a certain point.
“So, yeah, will this hit some of the higher income folks in particular? Especially in the city?” he said. “You know, those that are used to deducting millions of dollars of income taxes, of property taxes maybe that they have on their multimillion-dollar mansions that are there – that's going to be an impact, and I recognize that.”
But Reed argued that the new tax system will encourage business growth in upstate New York, and perhaps attract people to move to or stay in the region. He discussed the expansion of another deduction, called Section 179, which allows small businesses to deduct the cost of certain equipment or software purchases, from $500,000 to $1 million.
“You buy a backhoe for your excavating business, someone's got to make that backhoe. Someone's got to haul that backhoe. And where are the engines made for hauling that backhoe? Right in Cummins (Engines), right in Jamestown, New York, right in the district,” he said, adding that it would create a need for more jobs and more people to fill those jobs.
“We are already subsidizing every other state.” – Gov. Andrew Cuomo
Reed said that the state and federal government would have to work together to restructure state taxes and decrease spending. He said that his “door is always open” to Cuomo, and condemned the governor for pursuing a path of “name-calling” instead of constructive dialogue. Cuomo has referred to the tax plan as an “economic dagger targeted at the heart” of New York, and said earlier in December that it would “rape and pillage” the state.
“That is all about theater, that is all about politics, and my hope is we can rise above that and recognize the root cause of the problem at hand, and that is a spending culture in New York state and a tax culture in New York state that is just so oppressive that people have no choice but to leave our state, and limits the opportunity that people have,” Reed said.
McMahon also suggested that the state needs to adapt to the new tax system.
“If state officials from the governor on down sort of stand there and simply just continue to blame Washington and cry ‘woe is me,’ that is not a solution,” he said. He noted that New York was a more expensive state than states with comparable slow population growth, like Maryland and Massachusetts, because of its large public workforce and high cost of public works projects.
“You have to do something to control, to rein in the size and cost of public employment, of the government workforce,” McMahon said.
When asked to respond to Reed and McMahon, state Division of the Budget spokesman Morris Peters provided the same statement that was given to the Daily News in an article about the state population published Dec. 20.
"It's under this administration that property taxes were capped, middle income taxes were cut to record lows, upstate unemployment was slashed in half, private sector jobs reached an all-time high, the minimum wage was raised to $15 and the state has undertaken a $20 billion affordable housing plan,” he said. “This is why we remain the place that people from around the world come to live the American dream and quoting a conservative political pundit clearly is an attempt to politicize the issue, which is unproductive."
In an interview with NPR’s "Morning Edition" on Dec. 6, Cuomo defended the state’s high taxes as necessary for providing benefits to residents.
“We believe in providing social services and free college tuition, et cetera,” he said, adding that other states raise revenue through value-added taxes and real estate taxes. He noted that the tax bill seems to punish blue-leaning states with high property and income taxes specifically. Cuomo suggested that the blame for high taxes also rests with the federal government, as New York is a “donor” state, putting in $48 billion more in federal taxes than it receives each year. An October report by state Comptroller Thomas DiNapoli found that the state receives 84 cents for every dollar it sends in federal taxes.
“We are already subsidizing every other state,” Cuomo said.