(Jon Miltimore, Foundation for Economic Education) Rep. Thomas Suozzi’s message to the (likely) soon-to-be departing financial firm Goldman Sachs had the sound of an 80s love ballad: don’t go, baby.
“Please don’t leave us,” the New York congressman said on CNBC following news that the multibillion-dollar investment bank is likely to bolt New York City for Florida. “We’re in a desperate time in New York right now. We need you. You’re important to us. We want you to stay.”
There’s no question that New York’s situation is desperate. The state was facing a $13 billion budget deficit and an exodus of people before the coronavirus arrived. The pandemic, and the draconian and bungled response to it from lawmakers, has only made the situation worse.
The 36,000 New Yorkers who died with or of the coronavirus is a higher death toll than 95 percent of the countries in the world, in large part because of Gov. Andrew Cuomo’s order that forced nursing homes to admit discharged COVID-19 patients. Meanwhile, government efforts to slow the spread of the virus have ravaged the state’s economy.
New York’s unemployment rate stands at 9.6 percent, higher than all but two US states, and its aggressive enforcement of lockdowns has devastated commerce. The New York Times recently estimated that one-third of small businesses in the state may be gone forever.
Many of the perks of being in New York have vanished, which has hastened the exodus from the Big Apple and resulted in a drain on the greatest of all resources: people.
While New York’s response to the virus has been disastrous, its economic plight cannot be blamed solely on the pandemic or the response to it. History and recent events suggest Goldman’s pending exit may be part of a larger economic shift at work.
Goldman Sachs is hardly the only company or entrepreneur making a move.
Days after the Goldman Sachs news broke, Elon Musk dropped some news of his own.
It’s not just tax rates, however. Both New York and California have created climates hostile to capital, markets, and entrepreneurs.
New York City Mayor Bill de Blasio openly complains about the problems with private property, the engine of wealth creation, and New York elected officials publicly float a 120 percent tax on the wealthy “to confiscate their wealth & put them in debt before they leave us.” These are not idle threats. The New York Senate is currently considering a massive tax hike on wealthy New Yorkers, and the Wall Street Journal reports it is even trying to make the tax retroactive “to some earlier point in 2020.”
In California, the treatment toward entrepreneurs is arguably worse (just ask Elon Musk).
It’s naïve to think people who work for Goldman Sachs, which would not be the first financial company to flee New York in recent years, and Oracle do not notice this treatment or these tax proposals.
Meanwhile, these wealth creators are being welcomed with open arms by officials in Florida and Texas, warm-weather states that have no income tax, booming financial sectors, functioning cities, and plenty of entertainment.