New York governor Andrew Cuomo has stood firm against intensifying pressure to avert massive budget cuts by raising taxes on the many billionaires who live in his state.
As that campaign to tax billionaires received a recent boost from Congresswoman Alexandria Ocasio-Cortez and New York’s Democratic state legislative leaders, Cuomo has insisted that he fears that the tax initiative will prompt the super-rich to leave the state. On Wednesday, he doubled down, warning that if the state tried to balance its budget through billionaire tax hikes “you’d have no billionaires left”.
But in defending billionaires, Cuomo is protecting a group of his most important financial boosters. More than a third of New York’s billionaires have funneled cash to Cumo’s political machine, according to a Too Much Information review of campaign finance data and the Forbes billionaire list.
New York disclosure records show that 43 of New York’s 118 billionaire families have donated money to Cuomo’s campaigns and the state Democratic party committee he controls. In all, those billionaires and their family members have delivered more than $8m to Cuomo’s political apparatus since his first gubernatorial campaign. That includes large donations from billionaires in the last few weeks as Cuomo has fought to stop tax hikes on billionaires.
Eleven of Cuomo’s billionaire donors have delivered $100,000 or more to his campaign and the New York State Democratic party’s housekeeping fund. They include hedge fund titans James Simons ($3.6m), Stanley Druckenmiller ($1m) and Daniel Loeb ($114,000); real estate moguls Alexander Rovt ($321,000) and Stephen Ross ($80,000) and investor Ronald Perelman ($197,000). Ross, Simons and Simons’ wife delivered a total of $115,000 to Cuomo this month.
With Cuomo blocking billionaire tax hikes, his 43 billionaire donors have increased their net worth by $22bn during the pandemic, according to Forbes data compiled by Americans for Tax Fairness, which pushes for higher taxes on the wealthy.
In all, New York’s 118 billionaires have seen their net worth increase by $77bn since coronavirus hit the United States. Those billionaire gains in just three months are more than five times the size of the state’s entire projected budget shortfall of $14bn.
Cuomo’s office asserted that millions of dollars of campaign donations from billionaires had no bearing on the governor’s decision to oppose Democratic legislation to raise taxes on billionaires, calling the idea “stupid and insulting.”
“As the governor has routinely said, anyone who can be influenced by a dollar doesn’t deserve to be in this business,” said Cuomo spokesman Rich Azzopardi. “New York currently has the most progressive and second highest millionaires tax in the nation, and we’ve been very clear about the challenges facing us in an era where high earners have already moved away from the city and the state in the face of this pandemic, and the federal government is supporting legislation that would change the law and allow them to pay taxes where they telecommute from – not the state or city where their company is located.”
New York Democratic lawmakers have been floating proposals to address the budget crisis with tax increases on the wealthy. One initiative would raise capital gains tax rates on those with more than $1bn of assets, raising more than $5.5bn of new public revenue from billionaires each year. New York City alone is home to more billionaires than any other metropolitan area on the planet.
Cuomo, however, has steadfastly opposed such tax hikes on the wealthy throughout his political career. He has previously championed a plan to eliminate New York’s bank tax and he reduced the state’s corporate tax rates to its lowest level in more than 50 years. He also cut tax rates on purchasers of luxury yachts and private jets – and now he has worked to stymie his party’s billionaire tax plan.
Instead, Cuomo has pushed for big spending cuts. In April, the legislature approved a plan to let Cumo’s budget director make $10bn of spending cuts. That plan also approved Cuomo’s push to cut $2.5bn from Medicaid, flatline education spending and impose tougher eligibility requirements on some long-term public benefits.
On Monday, the governor said that if his state does not secure financial aid from Washington, New Yorkers may see increased mass transit fares and toll levies because “the money needs to come from somewhere.” Local governments could also see big cuts.
Earlier this month, Cuomo declared that he will block tax increases on billionaires in New York out of a fear that the wealthy will flee the state – a concern he reiterated on Wednesday. It is an argument he has been making for years to justify opposition to tax increases on his state’s financial elite and there is little basis for it.
A Stanford University researchers’ 2016 study of IRS data found that so-called tax flight among the wealthy is negligible.