Friday, October 25, 2013

New York Times article by James Stewart on taxing the ultra-rich

The New York Times has just posted on-line an article by James Stewart, discussing mayoral candidate Bill de Blasio's "tale of two cities" theme and recently expressed interest in taxing the ultra-wealthy (whom he defines as those making more than $500,000 per year) to fund pre-kindergarten and after-school care.

It's not clear how much (if anything) de Blasio could actually do in this regard, given Albany's power over tax changes even if they are just in and for New York City.  But I am quoted a few times in page two of the article (available here) with regard to the question of what New York City ought to do, assuming it could set its own tax policy.

Despite the fiscal federalism arguments for setting distributional policy at the national level, I see a pretty good case for New York City raising taxes, up to a prudent point, on people at the very top of the income spectrum.  It is largely a question of market power - how much would we get in tax revenues relative to the problem of inducing exit?  But New York City really does appear to have some market power these days, as a global destination city much like London, implying that we have some leeway to get revenues from the super-rich even though the exit problem clearly must be kept in mind.

For those who still read hard copy of the Times, the article will be appearing in tomorrow's (Saturday's) business section.


Michael Livingston said...

500,000 does not strike me as "super rich" in New York. It seems more like an arbitrary number. Why not pick a certain percentage of people, which at least would have some crude logic to it?

Daniel Shaviro said...

Well, it's all relative. Yes, to some $500K would definitely not make the cut.