New York Governor Kathy Hochul’s recent plea for wealthy residents to return to the Empire State reveals more than she probably intended. When the president of a state effectively says, “We need your money,” it is not a sign of strength, but an admission that the model has been violated.
Her plea to wealthy former residents comes across as a comedy skit: New York is already overloaded and overregulated, but please come back because we are in the process of raising taxes and imposing more anti-growth regulations.
For years, New York has operated under the illusion that ever-higher taxes and ever-expanding government services can go hand in hand with economic dynamism. That illusion now collides with reality. High earners, the very people who finance a disproportionate share of the state budget, have left for states like Florida, where the tax climate is lighter and the regulatory burden is much less suffocating.
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The problem isn’t that wealthy New Yorkers suddenly lost their civic sense. It’s that New York has made it increasingly irrational to stay.
Start with the expenses. Under Hochul, state spending has increased by roughly 20%, an increase so large that it exceeds the entire budgets of many states. That growth is not driven by necessity; it is driven by a political culture that views tax dollars as an inexhaustible resource.
Take Medicaid, one of the largest costs. New York spends more per recipient than any state in the country, with total program costs in the tens of billions annually. More than a third of residents are enrolled, far above national standards. This is not compassion, it is inefficiency on a grand scale. While nearly half the population relies on government health programs, the system is not only generous; it is structurally unsustainable.
Compare that to Florida. The contrast is great. Florida has no income tax, a smaller Medicaid footprint and significantly lower per capita spending, yet continues to attract business, investment and people. The economy has grown faster, the unemployment rate is lower and the population is increasing instead of decreasing.
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Meanwhile, New York is piling on regulatory burdens, especially in New York City, where zoning regulations, labor mandates and compliance costs make it extremely expensive to build, rent or expand. These are not abstract complaints; they translate directly into higher housing costs, lower employment and slower growth.
The state’s defenders argue that these high taxes fund essential services. But that raises a more fundamental question: Should New York really provide all the services it currently does, at the scale and at the cost that it does?
If public school spending far exceeds that of other states without delivering superior outcomes, or if health care costs are dwarfed by those elsewhere without a clear outcome advantage, the problem is not funding, but governance. Throwing money at problems is not the same as solving them.
Hochul’s appeal to wealthy taxpayers inadvertently underlines a dangerous dependency. A budget system that is so dependent on a small number of high earners is inherently vulnerable. When those taxpayers leave, as many already have, the entire structure begins to falter.
If the governor is serious about keeping successful, productive people in New York, the solution is not to beg them to return. It’s to make the state worth staying in.
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That means lowering marginal tax rates, not threatening to raise them. It means reining in spending, especially in large-scale programs like Medicaid, through efficiency reforms and eligibility discipline. It means reducing excessive regulations that distort business formation and drive up costs, especially in New York City.
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Most importantly, this means rethinking the role of government itself. New York doesn’t have to be everything to everyone. It should be a place where ambition is rewarded and not punished.
The rich don’t come back because they are asked. They will return when New York earns their investment again.
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