NY Is Starting to Run Out of Other Peoples’ Money

Margaret Thatcher said it years ago: socialism works—until you run out of other people’s money.

New York may not call itself socialist, but the logic is starting to look familiar. That’s because the numbers, and the behavior, are starting to tell the same story.

The Warning From Inside the System

This isn’t coming from critics on the outside.

It’s coming from inside the Democratic establishment itself.

Governor Kathy Hochul recently warned that raising taxes too aggressively could push wealthy residents out of New York—something the state can’t afford.

That’s not ideological opposition.

That’s a recognition of reality.

New York’s model depends heavily on a relatively small group of high earners to fund a large portion of public spending. Lose them, and the math stops working.

And the state already sees the pressure.

The Tax Base Isn’t Infinite

The assumption behind repeated tax hikes is simple:

There’s always more money to tap.

But that assumption breaks down when mobility enters the equation.

Wealthy individuals and businesses aren’t fixed in place anymore. They can—and increasingly do—move.

Recent data shows billions in income leaving high-tax states like New York, with lower-tax states like Florida gaining significantly.

That’s not theory.

That’s behavior.

And behavior matters more than policy intent.

The Political Reflex

Despite that reality, the instinct in Albany remains the same:

When there’s a budget gap, look for more revenue. Governor Hochul recently went on the air to try to persuade rich people who left New York state because of her high taxes to come back to New York so she could… wait for it… tax them more.

New York State, and especially New York City, want to raise taxes on:

• High-income earners
• Corporations
• Property

The logic is politically convenient. It targets groups that are easy to portray as capable of absorbing the hit.

But convenience isn’t strategy.

Because every increase carries a second-order effect:

• Reduced incentive to stay
• Increased incentive to relocate
• Gradual erosion of the tax base

And once that erosion starts, it compounds.

The Growing Tension

Even within New York’s Democratic leadership, there’s a visible split.

On one side, progressive lawmakers continue to push for higher taxes on the wealthy and corporations to fund social programs and close deficits.

On the other, Hochul is signaling caution—acknowledging that New York is “in competition with other states” with lower tax burdens.

That tension matters.

Because it reflects a deeper question:

Is the problem a lack of revenue—or a mismatch between spending and reality?

The Corporate Signal

It’s not just individuals making decisions.

Companies are reading the same environment.

Major firms are increasingly expanding or relocating to states with lower taxes and fewer regulatory burdens, signaling a shift in where economic activity is headed.

That’s not political messaging.

That’s market response.

And markets don’t wait for consensus.

The Structural Problem

New York’s challenge isn’t unique.

But it’s amplified.

High costs, high expectations, and a shrinking tolerance for inefficiency create a system that requires constant inflow of revenue to sustain itself.

When that inflow slows—or reverses—the system doesn’t automatically adjust.

It looks for more input.

That’s the trap.

Because if the response to losing high earners is to increase the pressure on the ones who remain, you accelerate the very problem you’re trying to solve.

The Illusion of Stability

For a long time, New York could absorb this.

The economic engine was strong enough. The appeal of the city—and the state—was powerful enough to offset the cost.

That buffer is shrinking.

Remote work, changing industry dynamics, and increased interstate competition mean people have options they didn’t have before.

And they’re using them.

The Hard Question

At some point, the conversation has to shift.

Not just:
How do we raise more revenue?

But:
What happens when the people funding the system decide to leave?

Because that’s the part policy can’t control.

You can legislate tax rates.

You can’t legislate where people choose to live.

The Warning Light Is Blinking Red… And So is the Balance Sheet

“Running out of other people’s money” isn’t just a political talking point.

It’s a structural warning.

Systems built on a narrow base of contributors are inherently fragile—especially when those contributors have the ability to exit.

New York isn’t there yet, but the signs are visible. And when even the people inside the system start acknowledging the risk, it’s worth paying attention. Because by the time the money actually runs out, the people it depended on are already gone.

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Charles is the owner of The Havok Journal. He served more than 27 years in the U.S. Army, including seven combat tours in Iraq and Afghanistan with various Special Operations Forces units, two assignments as an instructor at the United States Military Academy at West Point, and operational tours in Egypt, the Philippines, and the Republic of Korea. He holds a doctorate in business administration from Temple University and a master’s degree in international relations from Yale University. For The Havok Journal, he writes largely on leadership, military and veteran issues, and current affairs.

As the Voice of the Veteran Community, The Havok Journal seeks to publish a variety of perspectives on a number of sensitive subjects. Unless specifically noted otherwise, nothing we publish is an official point of view of The Havok Journal or any part of the U.S. government.