ALBANY, N.Y. (AP) - This year, the deep pockets of New York's rich were tapped like never before. The state's wealthiest pay new higher income tax rates, higher taxes for limousines and yachts, more to enter a horse in a race and more to dabble in real estate.
Meanwhile, many are losing millions from the closing of business tax loopholes and those making over $1 million are losing tax deductions others get.
Now, early revenue figures suggest that taxing the wealthy more under this year's state budget may have driven away richer New Yorkers. That could make the economic comeback for the state even harder.
"You heard the mantra, 'Tax the rich, tax the rich,"' Paterson said Wednesday at a gathering of newspaper editors at an Associated Press event in Syracuse. "We've done that. We've probably lost jobs and driven people out of the state."
"People aren't wedded to a geographic place as they once were. It's a different world," New York Lt. Gov. Richard Ravitch said.
Ravitch said last year's surcharge on income taxes for the next three years won't likely meet budget expectations. He said Albany must look to politically difficult spending cuts, rather than more taxes, to meet a deepening shortfall that Paterson estimated Wednesday could reach $3 billion.
"I don't think they have any choice," Ravitch said. "In my personal opinion, we're at the outer limits of the elasticity of our tax system."
For some, it's already snapped.
Buffalo Sabres owner Tom Golisano, the Paychex founder and billionaire who was paying $13,000 a day in New York income taxes, and media mogul Rush Limbaugh became ex-New Yorkers this year. Developer and New York icon Donald Trump told Fox News in April that the higher tax rates were foolish, stupid and "a total disaster for the state" and have spurred several of his millionaire pals to talk about leaving.
Golisano, who created 5,000 jobs from his Rochester payroll processing company, bristled when politicians said he was bailing out on New York this spring.
"If anything, New York state has bailed out on us," said Golisano, a past independent candidate for governor.
Paterson said Wednesday that revenue from the income tax increases and other taxes enacted in April were running about 20 percent less than anticipated. It's contributed to the deficit in a recession that's become worse than previously forecast.
"When you raise personal income taxes, people leave the state and revenues go down," said Senate Republican leader Dean Skelos of Nassau County in Wednesday's budget session.
So far this year, only half of about $1 billion in revenue from New York's 100 richest taxpayers has come in. The state budget office says most or all may be from losses suffered in the recession and may still come next year when filers exhaust their extensions, although they had to pay at a level of at least their 2008 liability in April. The budget office was not sure how much of the lower revenue can be attributed to wealthy New Yorkers who became fed-up and left.
According to the Manhattan Institute, the wealthiest 1 percent of New Yorkers paid 41 percent of all state income taxes before the new tax rates were approved.
"It's not just who leaves," said the institute's E.J. McMahon. "It's who doesn't come here? Who doesn't start a company here? Who graduates from Columbia and decides to start up a business in Philadelphia so they don't have to share their money with Albany?"
It's people like Nancy Bell.
Bell is moving her Science First manufacturer of scientific products from the Buffalo site her father founded in 1960 to Florida, which aggressively courted her and her two business-partner sons. They are building a new facility there and, with the state's help, had 1,000 applications for 20 jobs.
"It was the higher tax brackets, the so-called millionaire's tax" that forced the move, she said. "We feel we have to look to the future ... I'm leaving wonderful, wonderful friends. It's not our first choice. It's our 100th."
