New York To Become Ghost Town After Largest Tax Hike In History?

And two months ago one would have been almost tempted to believe David Paterson that he "will never increase taxes." Too bad that like every other politician, a little time and a ridiculous budget deficit is all it took for the governor to flip on his promise.

The New York State budget is a not a good omen for its public sector finances or the business community. Yes, the starting point was a tough one: the deficit to close was 13% of revenues, state tax collections are plummeting, it will soon cost more to take the subway than to rent a limo, and the recession is deep. But the reliance on individual and business tax increases over spending cuts may have long-term costs when you consider the following:

• New York already has the highest personal tax burden per capita and thehighest corporate taxes per capita in the country
• New York also already has the highest spending per capita. One example: New York Medicaid spending per capita is 45% higher than the next closest state.

So the budget, which failed to enact any significant spending reductions or fiscal reforms, is a disappointment. New York's spending appears out of control relative to its ability to sustain it, particularly once federal transfers run out. From a pure operating cost perspective, some businesses and individuals may be incented to relocate elsewhere, hence the titles on the following very troubling charts. They show where New York ranks on taxes and spending, even before the recent tax hikes which constitute the biggest tax increase in NYS history.

hat tip reader Mike.