STEVE FORBES: Drive out wealth, then beg — Hochul’s New York in a nutshell
New York Governor Kathy Hochul’s recent plea for wealthy residents to return to the Empire State reveals more than she likely intended. When a state’s chief executive effectively says, "We need your money," it’s not a sign of strength, it’s an admission that the model is broken.
Her plea to well-to-do former residents comes across as a comedy skit: New York is already overtaxed and overregulated, but please come back as we are in the process of enacting higher 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 coexist with economic dynamism. That illusion is now colliding with reality. High earners, the very people who fund a disproportionate share of the state’s budget, have been leaving for places like Florida, where the tax climate is lighter and the regulatory burden far less suffocating.
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The problem isn’t that wealthy New Yorkers suddenly lost their civic spirit. It’s that New York has made it increasingly irrational to stay.
Start with spending. Under Hochul, state spending has surged by roughly 20%, an increase so large it exceeds the entire budgets of many states. That growth isn’t driven by necessity; it’s driven by a political culture that treats taxpayer dollars as an inexhaustible resource.
Consider Medicaid, one of the biggest cost drivers. New York spends more per recipient than any state in the nation, with total program costs reaching into the tens of billions annually. More than a third of residents are enrolled, far above national norms. This isn’t compassion, it’s inefficiency on a grand scale. When nearly half the population depends on government health programs, the system isn’t just generous; it’s structurally unsustainable.
Compare that with Florida. The contrast is stark. Florida has no state income tax, a smaller Medicaid footprint and significantly lower per-capita spending, yet it continues to attract businesses, investment and people. Its economy has grown faster, its unemployment rate has been lower, and its population is rising, not shrinking.
Meanwhile, New York piles on additional burdens through regulation, especially in New York City, where zoning rules, labor mandates and compliance costs make it extraordinarily expensive to build, hire, or expand. These aren’t abstract complaints; they translate directly into higher housing costs, fewer job opportunities and slower growth.
The state’s defenders argue that these high taxes fund vital services. But that raises a more fundamental question: does New York truly need to provide all the services it currently does, at the scale and cost it does so?
When public school spending far exceeds that of other states without delivering superior outcomes, or when healthcare costs dwarf those elsewhere with no clear advantage in results, the issue isn’t funding, it’s governance. Throwing money at problems is not the same as solving them.
Hochul’s appeal to wealthy taxpayers inadvertently underscores a dangerous dependency. A fiscal system that relies so heavily on a small number of high earners is inherently fragile. When those taxpayers leave, as many already have, the entire structure begins to wobble.
If the governor is serious about keeping successful, productive people in New York, the solution isn’t 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 massive programs like Medicaid, through efficiency reforms and eligibility discipline. It means rolling back excessive regulations that choke business formation and drive up costs, particularly in New York City.
Most importantly, it means rethinking the role of government itself. New York doesn’t need to be everything to everyone. It needs to be a place where ambition is rewarded, not penalized.
The wealthy won’t return because they’re asked. They’ll return when New York once again earns their investment.