No good deed goes unpunished.
Seems that New York Governor Andrew Cuomo has added a new dimension to the old adage.
Cuomo has revealed that the thousands of generous health care workers from other states who answered New York’s desperate call for volunteers to help the hard-hit state with its COVID-19 crisis will be receiving New York state income tax bills for the period of time they were helping out in New York.
In an Orwellian turn of phrase, the Governor says that not taxing them for the time these residents of other states risked their health to serve New York would amount to giving them “subsidies.”
But it is even worse than that: Cuomo is using the people who flocked to New York at considerable risk to themselves as pawns in his battle with the federal government for a bailout. He said:
“If we don’t get more money from Washington, we can’t fund schools at the rate we want to fund them. We are in dire financial need,” Mr. Cuomo said in explaining why the state couldn’t afford to provide what he called “subsidies” to guest workers.
“We’re not in a position to provide any subsidies right now because we have a $13 billion deficit,” Gov. Andrew Cuomo said. “So there’s a lot of good things I’d like to do, and if we get federal funding, we can do, but it would be irresponsible for me to sit here looking at a $13 billion deficit and say I’m gonna spend more money, when I can’t even pay the essential services.”
The health workers who risked their safety helping in New York could find themselves facing double income tax bills for that time: one from New York, and one from the states in which they actually live. (According to New York law, if you work in the state for 14 days, you have to pay New York income tax.)
“Our financial comptroller called me,” Samaritan’s Purse Vice President Ken Issacs told PIX11 News, “and he said, ‘Do you know that all of you are going to be liable for New York state income tax?’
“I said, ‘What?'” Isaacs added. “[The comptroller] said, ‘Yeah, there’s a law. If you work in New York State for more than 14 days, you have to pay state income tax.'”
It’s not just New York’s income tax itself that will cost volunteer health workers. Time-consuming financial pain will also be brought with the associated compliance costs. Isaacs points out that between “the bureaucracy, and the paperwork…once you start filing that, you have to do that for like a whole year or something.”
Everybody understands that New York has been hit hard by COVID-19, but the state’s financial problems started well before the crisis. Steve Malanga notes in this morning’s Wall Street Journal:
New York faces enormous financial challenges because of the closing of much of its economy. Mr. Cuomo has extended rules keeping all but essential businesses closed and said that his state, with about a quarter of all cases nationwide, will be among the last to reopen.
Even so, New York enacted a $177 billion budget in April, only $1 billion less than what Mr. Cuomo proposed in January, before Covid-19. The plan banks on $10 billion in federal aid beyond the $40 billion that New York has received for coronavirus health-care costs and relief for businesses and individuals.
He has since lobbied incessantly for more aid, sparring with U.S. Senate Majority Leader Mitch McConnell, who said he’s holding off on “a vast new rescue package” for state and local governments until it’s clear what happened to the $2.8 trillion already committed. Mr. McConnell also enraged Mr. Cuomo by suggesting states be allowed to go bankrupt to deal with obligations incurred before the crisis.
Stoking regional animosities, the Governor argues that his high-spending state is simply more entitled to the taxpayer’s money than other states:
Mr. Cuomo claims New York deserves more aid because it is a “donor” state, contributing more money to the federal government in taxes than it gets back in spending. That argument might be more convincing if the state’s heavily Democratic congressional delegation didn’t consistently support higher federal tax rates, which take more money proportionally from New Yorkers than from residents most elsewhere because of the state’s higher incomes. They asked for it.
States that have spent beyond their means will likely be resorting to new and original ways to squeeze people.
But it is hard to imagine any state coming up with a ploy that looks as bad as this one does.