New York’s slow reopening has begun just in time for a virtual April 15 — Tax Day 2.0, pushed back three months by the novel-coronavirus pandemic. In a way, it’s the end of an era: The tax returns due to be filed on Wednesday will report incomes earned in 2019, the close of a decade-long economic expansion.
The wide-open, full-employment economy of the recent past is fast disappearing in the rearview mirror. Looking ahead, state and local governments in New York face an especially rough uphill climb back to even a semblance of normalcy.
Gov. Andrew Cuomo projected in April that the state income tax — by far Albany’s largest revenue source — won’t recover to fiscal 2020 levels for four years, opening the biggest budget gaps the state has ever seen. Even that outlook might prove overly optimistic, especially if (or when) the rejuvenated stock market wakes up to new economic realities. Mayor de Blasio’s latest financial plan assumes a faster, two-year recovery in city tax receipts — which seems almost delusional by comparison.
A large chunk of New York’s highest-earning 1 percent — who generate nearly half of the city’s income tax and more than 40 percent of the state income tax — fled the city when the pandemic hit. While most apparently retreated to second homes in neighboring counties of the tri-state area, thousands temporarily moved to more distant states — including low-tax Florida.
E.J. McMahon is a senior fellow at the Empire Center for Public Policy and a Manhattan Institute adjunct fellow.
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