NYC Economy vs Washington DC Economy

Question

While New York Bleeds, Washington Thrives
https://www.businessweek.com/bwdaily/dnf ... _top+story

News is, Washington DC area economy is thriving while NYC economy is plummeting. Perhaps, it will be easier for people to search for jobs/internships in the DC area, compared to NYC. (I wonder how GTown Bschool recruiting is....)

1) Moody's Economy.com estimates that metro Washington's economy will actually grow 2.5% from mid-2008 through mid-2010. New York's economy is expected to shrink 4.2%. Washington is getting a boost from government spending to fight the recession and fix the financial system, as well as the ongoing expenses of fighting wars in Iraq and Afghanistan and promoting homeland security.

2) The New Talent Magnet
By at least one measure, it's Washington rather than New York that's attracting the best and brightest these days: According to George Mason University's Center for Regional Analysis, metro Washington leads the nation in the share of jobs that are in high-tech and the share of workers with advanced degrees.

3) As for New York, the mix—and the outlook—is bleak. Finance typically accounts for 32% of the metro region's output, mostly because finance jobs pay so well. But pay limits, combined with job cuts, will harm everything from condos to car dealerships. New York State Labor Dept. analyst James Brown says, "There will still be a need for capital-raising, but it's pretty clear the sector won't be as profitable or as large."

4) Mayor Michael Bloomberg on Feb. 18 announced a $45 million plan to retrain investment bankers, traders, and others who have lost jobs on Wall Street. The money will also provide startup money and office space for new businesses by the former Wall Streeters. https://www.nytimes.com/2009/02/19/nyreg ... .html?_r=1

BearStearner · Answer

I am relieved that a plan like this is in Mayor's plans. Although NYC need every cent to counter the possible budget deficit, it is critical that they save all the jobs in the city. Especially the finance jobs.

There are lots of talk about raising taxes on the rich in NYC. It's a good idea in the short run, but if all the rich leave the city and the state, then NYC will face the problem that certain counties in Long Island suffered through few years ago.

Jerz · Answer

There was an opinion piece in the WSJ today that talked directly to the tax issue in NYC. Problem is that NYC is so close to other states with lower taxes, so you can move a few miles and instead of paying the combined state and local tax of 10.5% in NYC, you could pay 8.97% to NJ or 5% to Connecticut. The top 1% of NYC residents already pay 50% of its income taxes, so you keep raising taxes on that population and they're going to start heading for the exit.

BearStearner · Answer

I 100% agree with this statement. It maddens me when they discuss this issue in local TV every night and they interview individuals who probably didnt pay much tax at all. Then they complain about how rich are getting away with this and that, while they aren't even paying taxes - just receiving welfare. This might be an extreme example but it conveys my point.

Skitalets · Answer

A number of companies are moving in the direction of DC, but I'd bet most of this effect is due to massive job loss in NYC coupled with the fact that DC is the most recession-proof city on earth. (Arlington is the 2nd most recession proof in the US and Durham the 3rd in a study I read recently -- government, education, and health care jobs are pretty solid.)

DC is a pretty great town, though. :-)

I would move back in a heartbeat if I had a good job there. Can't say I would entertain the idea of living in NYC.

I would move back in a heartbeat if I had a good job there. Can't say I would entertain the idea of living in NYC.

Toubab · Answer

That should be amended to say, the top 1% of residents who pay their taxes in full. The richest 10% in the U.S. are also the most likely to use offshore accounts and quasi-legal tax shelters as ways to avoid paying taxes. Quite a number of millionaires get away with paying paltry sums in taxes each year.

But more importantly, you should remember that even for someone in a lower tax bracket - say, me - paying a smaller percentage of their total income each year is still a lot of money, relatively speaking. When you make $40k/year, paying $10k of that into taxes is a big bite into your lifestyle. If I make $250k a year, paying $100k of that back in taxes (which is an exaggeration, but still) ain't really hurting that bad.

This isn't an argument to soak the rich. But the wealthiest Americans pay far less in income tax today than at any other point in history, so... I don't feel too bad for 'em.

Skitalets · Answer

Amen, Toubab. Especially the fact that most wealthy people actually do not pay a very high effective tax rate -- this is something Warren Buffet has been on about:

https://www.timesonline.co.uk/tol/money/ ... 996735.ece

I believe he has a $1m bet open that no Fortune 500 CEO pays a higher tax rate than their administrative assistant. So far no one has opened up their finances and taken him up on the offer.

A corollary argument that is irritating is that the US has the highest corporate tax rate in the developed world. Given all the exemptions and loopholes available, this is only true on paper. The actual effective corporate tax rate paid by most corporations is very, very low. My wife is writing her LLM thesis in tax on this very subject.

NYC Economy vs Washington DC Economy

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