Will the last one left turn out the lights?
The last time a Democratic governor of New York raised taxes on "millionaires," the job-creators voted with their feet. Rush Limbaugh and Thomas Golisano moved to Florida. Glenn Beck moved to Texas. Stephen Schwarzman decamped to Paris.
Trying to grasp why the current governor, Andrew Cuomo, would want to repeat this pattern, I took a look at the New York State campaign finance filings for his campaign. The first big gift that comes up is $25,000 from S. Daniel Abraham of Palm Beach, whose billions come from the Slim-Fast diet drink. Why shouldn't Mr. Abraham fund Mr. Cuomo's campaign? It's good, after all, for the economy in Palm Beach and in the rest of Florida, where there is no state income tax at all.
Other big funders of the Cuomo campaign, according to the New York state campaign finance records, include quite a few residents of Greenwich, Connecticut, which, compared to New York City or state, is another income tax haven. The CEO of National Realty and Development Corporation, Richard Baker, gave $25,000 listing a Greenwich address, and the hedge fund manager Paul Tudor Jones gave the Cuomo campaign $55,000. Anthony and Rachelle Malkin listed a Greenwich, Conn. address for their $75,000 in contributions to the Cuomo campaign. Brian T. Olson, a Connecticut hedge fund manager, gave $10,000 to the Cuomo campaign from a Greenwich address. Richard and Ellen Richman gave $80,000 to the Cuomo campaign from a Greenwich address. Walter Scheetz, a former hotel company CEO, also based in Greenwich, gave $10,000. Higher taxes in New York are good for Greenwich, making it more attractive by comparison, so it's easy to understand their generosity.
Less explicable are the big campaign contributions to Mr. Cuomo from wealthy New Yorkers whose taxes Mr. Cuomo just agreed to raise after promising during the campaign that he would not. Hedge fund managers: William Ackman, $45,000; James Chanos, $25,000; David Einhorn, $50,000; James Simons, $35,000. Even the New Yorker magazine's, the New York Times', and Bloomberg News' favorite libertarian corporate polluter boogeyman, David Koch and his wife Julia, gave $74,900 to the Cuomo campaign.
Were they duped by Mr. Cuomo's promises? Kenneth Langone, a wealthy supporter of Mr. Cuomo, is quoted by the New York Post saying of the millionaires tax that Mr. Cuomo had vowed to let expire: "I never thought it had a realistic chance of going away." Perhaps the others knew what they were getting into as well and simply allowed Mr. Cuomo to deceive the rest of the public. Or perhaps they did not.
The Manhattan Institute's E.J. McMahon says there's no count immediately available of how many filers would be subject to the Cuomo income tax increase that would hit joint filers with taxable income of $2 million and higher. Mr. McMahon said that in 2009 there were 27,700 New York State residents with taxable income $1 million and higher, of whom 13,900 lived in New York City, plus about 25,000 non-resident taxpayers, mainly from New Jersey and Connecticut, but also including those such as baseball stars or rock stars who live in Florida but pay NY taxes on wages earned when they play or perform here.
Some of the few thousand New York resident taxpayers who will be affected — a tiny minority in a state with a population of about 19 million — are no doubt studying up on New York's 548-Day Rule.
As for the ones laughing from Palm Beach or Greenwich, their time may come, too. If Mr. Cuomo succeeds in raising taxes on the "rich" in New York in the name of fairness, it will be a template for what he would do as president of the United States if he is elected in 2016, or what President Obama would try to do in a second term if he is re-elected.
Though perhaps at the national level, the opposition from the Republican Party and the business community will be stronger than it was here in New York, where the Republican leader in the State Senate, Dean Skelos, signed on to the deal, and where the Business Council of New York State cheered the deal on, and where another key business lobby, the Partnership for New York City, led by American Express CEO Kenneth Chenault and Macy's CEO Terry Lundgren, had its president, Kathryn Wylde, cheer on the tax increase.
All in all, it's a sad moment for the Empire State.