It Is Time To Stop Giving And Start Raising Revenue Without More Taxes And Instead Look For Fees For Services
There was a time that New York reigned supreme in the financial markets and Wall Street was the capital of the Financial World.
Now China, Hong Kong, London, and possibly a post-Brexit France or Belgium will gobble up the taxes and fees New York earns from the trickle down effect of the IPO market and financial markets in general.
Hedge funds did not relocate to Florida and Connecticut¹, and Goldman Sachs did not move to New Jersey for no reason at all.
Certainly, for everything from financial fraud to not believing in climate change, one New York Attorney General after another persecuting company hasn’t helped either. An aggressive anti-corporate stance by our city and state is depleting the economy of much-needed high-paying jobs. We’re being taxed out of our role as leader, and our local politics are only exacerbating the problem.
It is time for the government to make money, not just give it away to further the “progressive agenda.” Plans like free college tuition for families making less than $100,000 in New York State sound nice, but come at a heavy cost.
Under Governor Cuomo’s plan, roughly 940,000 families will qualify for free public college education, which his office estimates will cost $163 million in its first year alone, assuming the estimated 200,000 students accept the Governor’s offer of free school².
As Milton Friedman said, there’s no such thing as a free lunch. Someone ends up paying for it in the end, and someone will end up paying for this free education.
As a New Yorker who cares about the state in the long-term, I don’t want to see the streets look like they did in the 1970s, or for a repeat of 1975 when the city had to turn to the state for management assistance because we were literally bankrupt.
We don’t need more empty storefronts lining our streets. We don’t need our hedge fund managers and 1 percenters fleeing the state because Governor Cuomo doesn’t want conservatives like me, just because we believe in limited government and people being responsible for their own bills.
I don’t want New York City to end up like Detroit or San Bernardino or Orange County, California, simply because this Governor wants to tax and spend, rather than provide value and growth.
While I have my own ideas for how we can raise billions of dollars and make New York the business capital of the world again, the idea for this article is quite simple.
This country is facing a retirement crisis where 40 percent of Americans haven’t even begun saving for retirement³.
That’s on top of a banking and financial services crisis as more companies choose to launch their IPOs and secondary offerings in other countries like China, Hong Kong, Brazil, and Germany4. As a result, New York continues to fall behind on trading volume by nearly 35 percent since 20085.
There are roughly 8.4 million residents in the state of New York. Each one of those residents needs to be able to retire, even though current projections make that unlikely or extremely difficult.
In California, they offer asset protection through their Code of Civil Procedure: Private Retirement Trusts (PRT).
A PRT allows individuals to place their money in a trust that is basically safe from creditors, except in certain cases, such as for fraud; otherwise, the trust is relatively safe and inexpensive to operate and can be funded on a regular basis.
California also passed legislation last year to create state-run retirement accounts for those who don’t have access to employee-run retirement accounts. They expect this to include as many as 7 million people.
By enacting legislation for PRTs in New York and charging a $350 fee per year to the entities holding the PRT and its assets, New York can generate $1 billion dollars in fees if only 2.85 million people take part in them.
While unquantifiable at this time, if the banks that held PRTs were only limited to New York-based companies paying New York taxes, this could have an even bigger impact on our local economy.
The PRT savings would not only be held by New York institutions, they would allow New York-based businesses to have an added source of capital protection on the books, as well as increase the number of businesses that deal in trading revenues and asset management.
More money in the system means more people to provide and develop services, which then creates more high-paying jobs.
More importantly, having a PRT means having an actual retirement plan, which means New Yorkers can start reversing our national crisis and allow people to put their savings in a safe place that allows them to grow. It can actually encourage people to move back to New York so they can get a form of asset protection and retirement planning, which does not exist for the most part in our state.
By creating entities that help people, encourage savings, encourage planning, and increase governmental revenue, we can at least slow down the process of moving toward insolvency, rather than rushing to the window and simply jumping. One day, the bond markets will feel, as they did in places like Puerto Rico and New Jersey, that New York should be paying a lot more for their debt, which will come because the Progressive agenda costs too much.
As Margaret Thatcher said, “The problem with socialism is that you eventually run out of other people’s money.” And progressivism is just socialism under a different name.
Now is the time for New York state and city government to stop giving away taxpayer money and start earning it to pay down debt and provide basic services, not scatter it to the wind with no plan of how to recoup it. Private retirement trust accounts can solve so many of these problems for the people who have been left behind as hedge fund managers, IPOs, and even large global blanks leave our city and state for more wealth-friendly locations.