We want to keep drawing your attention to the stunning collapse in tax revenues across various cities and states, not to mention the federal government.
It’s not just a matter of the economy slowing and unemployment picking up. It’s also due to the swift fall of many of the highest earners in the highest income tax brackets.
Anyway, NYC, with its concentration of Wall Street wealth, is feeling this worse than other places. Revenue collections so far in April are down 51%, the city said yesterday.
Sure this will stabilise, but even if the economy starts to grow again, it’s highly unlikely that things will return to the extreme income disparities between the rich and the middle class — an outcome that will make some social justice types happy, but will not be good news for state comptrollers and treasurers.
Meanwhile, the government has more it needs to spend on (unemployment), but can’t begin to cut costs 50%. So in the meantime look for tax hikes and a greater chance of city defaults.