CLAY: The House of Representatives has finalized some of their detailed tax codes, and I gotta hit you with this, Buck, ’cause you’re a New Yorker. The headline at CNBC right now: “Top earning New Yorkers could face 61.2% combined tax rate under House plan, Californians may face 59% rate.” Californians would face a 59% rate.

These, obviously, are adding up the state and local taxes. Your federal income tax, city, state, federal combined are up to 61.2%. Buck, when you… In New York City, the combined top marginal state and city tax rates are 14.8%. So New York City taxpayers who were the highest earning could face a 61.2% tax rate, and I gotta be honest with you.

I don’t know if you are a top-earning New Yorker now. Why would you stay in the city? If you’re a top-earning the Californian, why would you stay in the city or state out in California? I think a lot of people are just throwing up their hands and saying, “I’m moving. The tax rates have just become too onerous.”

BUCK: Well, the data shows that. You actually can see who’s gaining people, who’s losing people as states right now. And there is not some blue stronghold. We think of New York, California, Massachusetts, Illinois. None of these states are people clamoring to come to them who are already in America. There are…

What’s interesting is there are substantial immigrant inflows — including, by the way, legal immigrants — in places like New York. People often forget. California as a state has the most illegal immigrants in the country. But New York City as a city, unsurprisingly, has the greatest concentration of illegal aliens in one place.

Clay, this is exactly what people have been saying would happen but Democrats seem to not really care. But I think that the problem that they’re gonna face now is that New York — just to speak as a New Yorker — used to be a place where if you wanted a certain kind of job at a certain level, if you wanted opportunities in media, if you wanted opportunities in finance?

If you’re gonna work at one of the biggest advertising companies in the world? You had to actually be in New York for it. Yeah, they had offices elsewhere, but usually had to start out here, right? You want to be a Goldman Sachs banker bro? You gotta start out in New York City. Same thing founded in Hollywood. You actually were in L.A. and passing your screenplay around to people, all that the kind of stuff. That whole world has changed.

CLAY: Yeah.

BUCK: And we’ve seen it change more rapidly because of covid than in any other time in memory where now you have, yeah, some people are remote working, some people are not. There’s a lot of companies that are still figuring out what the mix is gonna be. But we ran a 12-month “Can you work remote?” test for a lot of people who are particularly high earners, and the answer was “yes.”

And in that environment… Now, remember some companies may say, “You have to come back to the office.” People say, “Well, okay. Maybe I’ll go for that slightly lesser known or that startup or that mid-tier, midrange company that does the same work and I have the same skill set.” I’m seeing this happen with people that I know, friends of mine who are saying, “I’m heading to Florida; I’m heading to Texas.”

A friend of mine just yesterday tweeted out that she was looking for houses in Texas, a lifelong New Yorker like me. Clay, at some point the value proposition swings too far in the other direction. When you have no SALT deduction, either and you start to do the numbers on this — you look at what it costs to have a house, you look at what it costs in taxes — you just say, Why?

“What am I getting for being here in some blue enclave where the crime is rising, the streets are dirty, the taxes are too high?” I have been my whole life a New York super fan – -super defender, even. I lived here when things were really crappy. I grew up here when the things were really happy in the nineties.

I saw the miracle of Giulianiism and the city becoming so safe that it felt like Disneyland. You’re walking around here and real estate prices are skyrocketing, restaurants are amazing, all that stuff. But now it’s going the other direction, Clay, and it’s not just New York. It’s San Francisco; it’s Los Angeles; it’s Chicago. It’s happening all over the place.

CLAY: You can’t find a house in Nashville. You just can’t. My neighborhood, the minute that the houses go on the market, they are selling for far in excess of what they’re even listed for. And most of the people that are moving here, Buck, are coming from California, they’re coming from New York, and they’re coming from the Chicago area.

They are fleeing high tax areas to come here. We have no state income tax in Tennessee — no state income tax in Florida, no state income tax in Texas — and you start to do the math on how much you can save. We talked about California and New York. New Jersey would have a 57.2% top tax rate. Hawaii, a 57.4% top tax rate.

This is under Democrats’ proposed plans. Now, ironically, the guy who may be saving some of these blue enclaves is a West Virginia Democratic senator, Joe Manchin, who has just said, “Hey, these tax increases, these budgets, the $3.5 trillion Bernie bill, it’s out of control.” Here’s what Joe Manchin said. Play cut 20.

MANCHIN: You will not have my vote on 3.5, and Chuck knows that, and we’ve talked about this. We’ve already put out $5.4 trillion and we tried to help Americans in every way we possibly can and a lot of the help that we’ve put out there and sill there and it’s gonna run clear until next year, 2022. What’s the urgency? What’s the urgency that we have?

CLAY: It’s not the same urgency we have with American Rescue Plan. We got that out the door quickly. That was about $2 trillion, and after that, all the things we felt with the care packages everything leading up to that so we have done an awful lot and there’s still an awful lot of people that need help but you have 11 million jobs that aren’t filled right now, eight million people are still unemployed. Something’s not matching up. Don’t you think we ought to hit the pause and find out?

BUCK: Yes.

CLAY: Pretty reasonable.

BUCK: Yeah. Clay, it’s amazing to be the reasonable voice in the room when you’re the guy who says, “We’ve already spent $6 trillion. Let’s maybe do $1.5 trillion in addition to the $6 trillion, not $3.5 trillion more.” Look at how many global economies even have a GDP of $3 trillion. You start to look at these numbers to put it all in perspective. And I worry, Clay… I give credit to this to Naval Ravikant, who is a Silicon Valley guy who just a really interesting thinker. We should have him on the show at some point.

CLAY: I’m sold already.

BUCK: He’s a really interesting guy. I think he was the founder of AngelList. But he’s a contrarian but a precise thinker. And he tweeted something out about how, yeah, the thing about inflation is that before it gets really painful and ugly, the stock market goes up, employment often starts to really go up, assets go up in value that you own. But then the foundation beneath all this starts to crumble, and then you have people realizing, “Oh, my dollars are worth less, my dollars are worth less,” and things get a whole lot less fun on the economic front.

CLAY: Yeah, and that’s the thing that frustrates me the most as a guy who built and sold a small business and still is hiring a lot of people. There is a fantastical disassociation in the Democratic Party — Modern Monetary Theory is what it’s called — between economic reality and business practices that have worked for hundreds of years in capitalistic economies. It’s like we’re pretending, Buck, those truths and those verities and those realities don’t exist anymore, and it’s leading us to absolute chaos, I really am afraid.

BREAK TRANSCRIPT

CLAY: Buck, we were just talking about inflation a bit in the last hour. The New York Fed has now come out and said that their inflation targets are 5.2% this year — 5.2% now, this is the New York Federal Reserve — and 4% over the next three years with large expected price rises in food, rent, and medical costs. Poor people are thinking, “Oh, we’re getting these tax refunds, these tax checks, everything else.”

They’re immediately getting eaten up by inflation, which acts as a default tax increase on everyone but impacts the poor (who have the least financial ability) the most. This is Jimmy Carter 2.0. Again, Federal Reserve: 5.2% inflation in one year, 4% in three years.

That is the highest level of inflation that many of us have seen in our lives, those of us who were born either at the tail end or after the Carter administration. I know a lot of people out there listening to us remember that. But there’s where we are. This is where Joe Biden’s economic policies led us.

BUCK: It’s not just wages.

CLAY: Yeah.

BUCK: It’s not just the food in the store. It’s also going to affect… This is what happens, folks. You print money; this is cause and effect, right?

CLAY: That’s right.

BUCK: We can all see it. We all know this is a function of data. Clay likes “the data.” This is a function of “the math.”

CLAY: Yes.

BUCK: What ends up happening is you have an increase in home prices. That home you want to buy or maybe that place you want to rent, even, is gonna get more expensive. But also, your investments. I mean, if you live off of an annuity, for example, of some kind — if you’re somebody that’s in some kind of a defined pension plan — understand that if you think you’re making…

You see that percentage, and a lot of these programs and 401(k)s and things like that, you have built into it, “Oh, it’s going to be X percent a year.” Well, you start losing 5% a year to inflation, the money you’re putting into a savings account that you think you’re getting, it’s less than 1%, right? It’s point something-something percent.

You’re actually going negative 5% a year. So you’re working your butt off, you’re putting your money away, you’re thinking, “I’m doing things for the right way,” and Uncle Sam is actually like the squirrels in your attic getting into your stuff, just eating away 5% a year at what you’re working hard to save. That’s the reality of the Democrat spending right now.

CLAY: Yeah, and there are so many elderly people in particular living on fixed incomes that don’t have the flexibility based on their current life situation to be putting the money into riskier endeavors. And, by the way, this is also a little bit scary about the stock market in general because one reason there’s so much money in the stock market is because a lot of people are looking around at the inflation rate and saying, “Where else can I put it without losing money?”

BUCK: Yeah, they’re chasing yield, and when everyone chases yield, what ends up happening? You create what would be known in financial parlance as a bubble.

CLAY: Yes.

BUCK: And when that bubble bursts, then people get hurt. Then the unemployment rate skyrockets. Then people lose half or more of their life savings and it’s just… This is the financial engineering that Democrats are engaged in right now, it’s really just failed socialism. They’re just trying to move money around, pay off the constituencies that they like, take more from the productive class, give more to the less productive.

While also always exempting, Clay, the actual elites, right, the people who have it. Nancy Pelosi doesn’t care what the tax rate is ’cause she’s worth $50 million or whatever it is. She’d care about a wealth tax, though, which is why you’ll never actually see that happen. But I worry that with the media on the side of the Democrats, class warfare, as much as it is rooted in fallacy, it is effective politics. And Democrats know that.

CLAY: Yeah. And the question is, are the Joe Manchins of the world, the Kyrsten Sinemas, going to be able to exert control in the Senate? And then — and I think even more nerve-rackingly because at least in the Senate you got six-year terms and a lot of these people can hope that the story and the disdain and the comfort over this decision fades. In the House, where Nancy Pelosi is up against it, there are a lot of moderate Democrats — seven of them I believe in districts that Trump won — who are in severe danger.

And we’ll see whether or not they have the testicular fortitude to stand up and actually oppose this situation. I’m not sure that they do. They may end up buckling. But this is gonna be a fascinating battle. And right now, a lot of it’s going under the radar.