New York Governor Kathy Hochul's proposed "inflation refunds" have drawn criticism from several economists who question the efficacy and potential consequences of the initiative. As part of her 2025 State of the State proposal, Hochul plans to distribute $3 billion in direct payments to roughly half of New York's residents. Single taxpayers earning up to $150,000 annually would receive $300, while joint filers earning double that amount would receive $500. Hochul justifies the refunds by attributing unprecedented sales tax revenue to inflation and stating the intention to return this money to middle-class families.

However, experts like Andy Puzder, former CEO of CKE Restaurants and current economics lecturer at Pepperdine University, argue that this move primarily serves to garner votes rather than address the root causes of inflation. Puzder suggests that a more effective approach would be to reduce the sales tax itself, benefiting all consumers. He contends that the current policy resembles the kind of tax-and-spend strategies that have contributed to the nation's economic woes, citing President Biden's American Rescue Plan as a primary driver of inflation. Puzder also points out that reducing taxes could help stem the tide of population decline New York has experienced, leading to the loss of a House seat and electoral vote.

Former Congressman Dave Brat, an economist and current vice provost at Liberty University, emphasizes the monetary nature of inflation, referencing Nobel laureate Milton Friedman. Brat argues that addressing inflation falls under the purview of the Federal Reserve, given its role in controlling the money supply. He deems Hochul's $500 payments a "trivial, symbolic move" against a substantial "hidden tax" imposed by inflation. He highlights that with a cumulative inflation rate of approximately 22% over the past four years, $500 in 2020 has a present-day purchasing power of only $390.

Economist EJ Antoni further criticizes the refunds, asserting they contribute to the inflationary cycle by increasing government spending. He acknowledges that New York State alone cannot cause nationwide inflation, but emphasizes that the refunds ultimately increase the cost of living for New Yorkers. Antoni contrasts Hochul's proposal with President Trump's COVID-era stimulus checks, arguing that the latter were distributed during a time of genuine economic hardship due to lockdowns and business closures. He suggests tax reductions as a more effective means of lowering the cost of living.

Antoni also raises concerns about the potential for such payments to become recurring, leading to a need for increased taxes to fund them. He believes that reducing taxes, rather than providing government handouts, is the most effective way to address the cost of living. Fox News Digital reached out to both the Brookings Institution and Governor Hochul's office for comment, but did not receive a response by the time of publication.