Even if you flee New York, you can't hide from the tax man

The rich are fleeing high-tax New York but are being pursued by tax authorities who are going after every penny possible.

The state is in the midst of a $2 billion budget crisis and even those who are trying to leave find themselves the subject of intrusive audits.

Fox News:

The aggressive approach by state tax collectors comes as the Empire State faces a $2.3 billion budget deficit that even Democratic Gov. Andrew Cuomo called “as serious as a heart attack.”

Cuomo, a vocal critic of President Trump, blamed congressional Republicans for passing tax reforms that reduced the state and local tax deduction Americans can take on their annual income tax forms -- meaning residents of high-tax blue states like New York have been feeling the pinch, sparking their exodus.

“This is the flip side. Tax the rich, tax the rich, tax the rich,” Cuomo said last month. “We did. Now, God forbid, the rich leave.”

I find it difficult to process the governor's ignorance. Is he really that clueless? When you raise taxes on the rich, the rich leave. Is that really so hard to fathom? 

But New York state auditors are doing their best to ensure that those fleeing the state’s high taxes will face difficulties, including being subjected to an audit -- likely to be followed by a massive tax bill.

New York conducted 3,000 “nonresidency” audits between 2010 and 2017, recouping around $1 billion from the practice, CNBC reported.

Between 2015 and 2017, the auditors on average collected $144,270 per audit, with more than half of those who were audited losing their cases.

New York's success rate on audits can be attributed not only to the traditional methods of investigation like going through an individual’s credit card bills, but also to new high-tech tools that include tracking phone records, social media, and even veterinary and dentist records, according to the outlet.

Isn't it illegal to use tax audits as a weapon to squeeze former residents for cash? If not, it should be. 

The irony is, "aggressive" tax collection like this will probably accelerate the exodus.

Yet New York's get-tough approach toward its former residents may pose some dangers in the long-term. While recouping unpaid money works for the state’s treasury in the short-term, such practices create a hostile environment for the wealthy that threatens to accelerate their exodus.

And with the top 1 percent paying nearly half of the income taxes in the state, New York can’t afford any more departures.

“Even if a small number of taxpayers leave, it has a dramatic effect on this tax space,” Cuomo said last month.

This sort of thing is going to happen more often in high tax states like New York, California, and Illinois. When taxes become unbearably high and people vote with their feet by moving to a lower tax state, rather than a state receiving less income, audits will be ordered to glean every last nickel from tax deserters.

Maybe New York will be one of the first state to run out of other people's money.


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