Say Tax Hikes will Delay Economic Recovery, Discourage Return of Remote Workers
"To Governor Andrew Cuomo, Leader Andrea Stewart-Cousins and Speaker Carl Heastie:
As committed New Yorkers and employers of more than 1.5 million residents, through businesses both large and small, we want the state to thrive and hope to work with you towards that end. We feel compelled, however, to express alarm at plans to enact the largest spending and tax increases in the state’s history. We believe the current budget proposals will jeopardize New York’s recovery from the economic crisis inflicted by COVID-19.
The American Rescue Plan, for which most of us advocated, is providing $1.9 trillion in federal funding to eliminate the need for new state and local taxes this year. Once we are on a path toward restoring more than one million jobs and thousands of small businesses that New York has lost in the past twelve months, there may well be need to raise new revenues to fill the gaps in our education, health and social welfare systems.
At this moment, however, significant corporate and individual tax increases will make it far more difficult to restart the economic engine and reassemble the deep and diverse talent pool that makes New York the greatest city in the world. We are not alone in this view; among others, the nonpartisan Citizens Budget Commission has said these tax increases are “both unnecessary and economically risky,” thanks to federal aid and higher than expected tax receipts in 2020.
For better or worse, the pandemic has demonstrated that our workforce is more mobile than we ever imagined. Our businesses are committed to maintaining a strong presence in New York, but currently only about 10% of our colleagues are in the office and prospects for the future of a dense urban workplace are uncertain. Many members of our workforce have resettled their families in other locations, generally with far lower taxes than New York, and the proposed tax increases will make it harder to get them to return.
This is not about companies threatening to leave the state; this is simply about our people voting with their feet. Ultimately, these new taxes may trigger a major loss of economic activity and revenues as companies are pressured to relocate operations to where the talent wants to live and work. This is what happened to New York during the 1970s, when we lost half our Fortune 500 companies, and it took thirty years to recover.
The pandemic has also put a spotlight on the inequitable condition of Black and Latinx communities, low-wage workers and immigrant populations who were struggling to survive in our high-cost cities in the best of times but have been ravaged during the past year. We understand your need to respond to these urgent human needs and we will continue to support these efforts through expansion of partnerships for education and workforce development, hiring and small business assistance.
COVID-19 has impacted New York in ways that none of us fully understand yet. A healthy state economy requires a strong partnership between business and government. We urge you to hold off on major tax and spending changes until the pandemic is behind us and the path to recovery is better defined. "
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