(PHOTO: Holding Court. Credit: MyRye.com via AI.)
Holding Court is a series by retired Rye City Court Judge Joe Latwin. Latwin retired from the court in December 2022 after thirteen years of service to the City.
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By Joe Latwin
(PHOTO: Former Rye City Court Judge Joe Latwin in his old Rye City Court office on Monday, December 5, 2022.)
Let’s return to the 1950s Cuba. Sky Masterson had taken Sarah Brown for a romantic overnight in Havana (but not to win a bet with Nathan Detroit), Hyman Roth is celebrating his birthday with Michael Corleone in the tropics while appreciating their successful hotels and casinos, Ernest Hemingway is enjoying his Lancero cigar at Finca Vigia 15 miles outside of Havana. Cuba had the third highest GDP in Latin America. It had the highest ratio of hospital beds to people in the Caribbean. Then came Castro and communism.
The cars driven in 1957 are still on the road. Property was confiscated. The hotels closed after being seized by the government. Industry was nationalized. Now there is no energy and daily blackouts. The entrepreneurs and businesspeople fled and so did the skilled workers. The cigar industry moved to the Dominican Republic, Nicaragua, and Honduras. Bacardi was seized and its former owners restarted the business elsewhere. Wages are now miniscule. Cuba can’t survive without outside assistance.
New York seems to be headed down the same path. Albany and New York City can’t seem to generate revenue without confiscatory taxes. Both have huge budget shortfalls. Each seems to think that taking more from the people will solve the problem, but it is having the opposite effect. More and more people and businesses are leaving. There will be less revenue and wealth to tax as we replace the moderate and well of with the poor.
New Yorkers learned during Covid that they did not have to be in New York City or State and could work remotely from milder climes, less expensive, or low tax jurisdictions. The out-migration from New York to Texas, Florda, Tennessee was accompanied by the transfer of wealth to those places in the billions of dollars. As the wealthy leave, they take not only their incomes with them, but their charitable donations and works too. The biggest driver of tax revenue, the stock exchange, is not really bound to New York. Trading is not done on the floor of the exchange anymore, but rather on computers. Big brokerage houses are setting up shop in Florida and Texas. Their highly paid executives are going with them. As industry leaves, jobs do too. Skilled workers go as well. The tax base shrinks leaving those left behind to pick up the deficiencies.
Like Havana, many New York hotels are no longer available to tourists because they have turned into housing for illegal immigrants. Less tourism means less revenue. New York is proposing to tax people who have second residences – pied-à-terres. The consequence of such a tax will (1) cause less luxury housing to be built, (2) drive down the value of existing luxury housing, (3) cut construction jobs and reduce building supply sales, (4) drive the wealthy out of New York, and (5) reduce real estate values and taxes requiring the shortfall to be paid by those that didn’t escape. This will be the beginning of a death spiral.
I fear New York will become Havana in the future, but without the tropical climate. As wealth, jobs, and skills flee, there will be less money for social programs but an increased need as only the neediest and poorest that can’t leave will be left to pay the bills. As Prime Minister Margaret Thatcher said, “the problem with socialism is that eventually you run out of other people’s money.” It doesn’t help that New York is chasing those “other” people away with rising crime, increased taxes, confiscation of property, out of control energy prices, and a sense that we are not getting good value for the taxes we do pay.
First, reduce the cost of government so that taxes can be reduced. Florida, with a bigger population, has no income tax and 1/3 of New York’s budget. If Florida can operate that cheaply, why can’t New York?