How is it not good-faith negotiation to leave if you don't get what you want? If your plan is to stay no matter what, why should the other party do anything you want?

I thought that's the essence of good-faith negotiation, when either side has the freedom to say "No Deal" and walk away.

It is poor negotiating strategy to say "Give me a raise or I leave.", because then your boss will be thinking about replacing you. Instead, you say something like "I've been here ## time without an increase. Is it time for an adjustment?" If he says no, then you should seriously think about leaving.