Come Back, Blue State Welfare Funders!

New York Governor Kathy Hochul made news recently with an  interview  that was at once revealing and pathetic. The revealing part was her plea for rich former New Yorkers to return so they can be taxed to support expansive state welfare programs. The pathetic part was that she seemed to believe some might. In a March 18 interview with Politico, Hochul  said  “I need people who are high net worth to support the generous social programs that we want to have in our state.” Many have decamped for red states like Florida and  Texas . The governor half-jokingly suggested someone “go down to Palm Beach and see who you can bring back home.” Hochul admitted high local taxes were driving many away,  noting  that “we are in competition with other states who have less of a tax burden on their corporations and their individuals.” But while  burnishing  a moderate image on taxes, she shares blame for current sky-high Empire State tax rates even as many  demand more hikes . EJ McMahon of the Manhattan Institute recently  reviewed  the history of New York’s soak-the-rich policies, which includes “the biggest marginal income tax rate increase in decades” in 2021, signed by then-Governor Andrew Cuomo. Hochul’s 2025  budget  extended  through 2032  those same surcharges for filers “with taxable incomes above $2.1 million.” Hochul’s budget  suggested  higher taxes on the rich were needed “to support the long-term cost” of tax relief for other New Yorkers. But her recent Politico interview  betrays  what’s really going on—revenue from the rich is needed “to support the generous social programs that we want.” Her budget  listed  increases for “mental health care, housing affordability and access, transportation, health care delivery, abortion access, and child care,” plus “free school meals for all students regardless of income; a first-time homebuyers down payment assistance program; free community college…hunger prevention and nutrition assistance” and more. As McMahon  noted , “New York’s most recent income tax hikes underwrote a 40% expansion of state operating funds spending over the past five years.” Hochul’s latest budget  projects  5.7 percent annual spending growth in 2027, including 11.4 percent for Medicaid. New Yorkers were forewarned about a tax-driven  millionaire exodus . In 2021 the Wall Street Journal  reminded  that “New Yorkers with high incomes have long  fled the state ,” and that the tax hikes Hochul subsequently extended “could push more to consider moving, especially now that working remotely is more common.” Hochul seconded that dynamic in her Politico interview,  lamenting  that once “There were people who could only work in an office in Manhattan and work in New York state. And they were captives to our state, they were going to stay.” They’re captives no more. Other blue states keep trying the same approach. After a new tax on millionaires, residents fleeing  Massachusetts  “took a net of $4.2 billion in adjusted gross income with them in 2023, one of the largest totals in the country,” with top earners responsible for most of the outflow.  Washington state  just created a millionaire tax to “fund child care programs, free school meals, tax credits for working families” and more. As John Puri summarizes in  National Review , “Many Democratic states are facing structural deficits as federal transfers dry up but spending on welfare and public services outpaces their population growth plus inflation.” Shunning spending cuts, they turn to tax hikes on what one  review  calls “a highly mobile, hyper-concentrated subset of ultra-wealthy individuals.” Good luck with that. Even Democratic legislators in California have long  admitted  the Golden State’s rich-focused tax base creates volatility and contributes to large structural deficits. Liberals at the national level also peddle soak-the-rich plans to promise still more welfare and other benefit increases. Bernie Sanders (I-VT)  proposes  a billionaire tax to fund vast stimulus checks, new low-income housing, Medicaid expansions, universal child care, and more. Meanwhile, the federal budget is already  deep in deficit  and Uncle Sam is looking to  offload growing welfare costs . As Hochul’s 2026 budget rightly  predicted , the future may hold “possible reductions in Federal assistance that support vital New York programs.” That all means that, if they want to reliably provide generous welfare and other benefits, states need reasonable budgets and dependable revenue sources. Governor Hochul’s comments reflect a rare admission that surtaxes on the rich carry significant tradeoffs. Not the least of which is that targeted taxpayers sometimes leave, taking revenue blue state lawmakers assume will finance expansive welfare and other benefits with them. Go figure.   The post Come Back, Blue State Welfare Funders! appeared first on American Enterprise Institute - AEI .