Millionaires plot New York exodus to avoid Covid tax hike

New York’s richest residents are preparing to flee the city after plans to make them pay the highest income tax rate in the US were signed off by officials.

Top earners will hand over 52% of their income to support federal, state and city budgets under the proposed hike, which is aimed at “boosting” New York’s “Covid-hit economy”, says The Telegraph.

But business leaders have warned that the move could “backfire by driving away the very people and companies the city relies on for its revenue”, the paper adds.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

New York’s “wealthiest 5%” currently contribute 60% of the city’s revenue, and “fewer than 2,000 of the very richest account for more than a sixth of tax revenues”, The Times reports.

So the loss of their tax dollars “would have significant consequences” for the Big Apple, which is already second only to California in the list of US states with the highest combined tax rate for top earners.

Euan Rellie, co-founder of investment banking advisory BDA, told the paper that “if we lose even a couple of thousand of these guys then tax receipts will shrink drastically”.

“Part of the reason I came here is because it’s such a business-friendly place,” he added. “The analysis I’m reading says business people in New York may be paying more tax than in some European countries, which is not what we were advertised at all.”

CNBC reports that many of the “executives who fled the city for Florida temporarily due to coronavirus pandemic lockdowns are considering permanent relocation” in the Sunshine State, which does not tax personal income.

These executives include Tracy Maitland, president of investment advisory firm Advent Capital Management. “I love New York and I was born and raised in New York,” Maitland told the broadcaster.

“I’m going to do whatever I can to try to steady the ship. If I can’t then I’m going to have to make a decision.”

Miami Mayor Francis Suarez is hoping to tip the balance among disgruntled tycoons considering quitting the Big Apple for good. Suarez told CNBC that he had been in contact with some of “the biggest firms in New York” since the tax hike was announced, and had received a “very receptive” response to his pitch about the benefits of his home territory.

Despite the threatened exodus, New York officials are refusing to back down over the planned tax rise, part of a state budget proposal signed off by legislators last week that is expected to be rubber-stamped by Democratic Governor Andrew Cuomo.

Under the new rate, “working- and middle-class taxpayers will receive the relief they desperately need, while the wealthiest New Yorkers will help their neighbours”, Andrea Stewart-Cousins, the majority leader in the state senate, told The Times.

But if the city’s millionaires decide to up sticks instead, some “fellow New Yorkers will “bid them good riddance”, the newspaper adds.

Former TV news anchor Michelle Caruso-Cabrera, who is standing to become New York’s next chief financial officer, said: “The only problem with moving to Florida is you have to live in Florida. I have lived in Florida and I assure you that I have chosen New York for a reason.”

To put that another way, “if you make your money in New York City and reward it by flying to Florida then you have your reward”, said Jill Kargman, an actress and writer based on the Upper East Side.

The exodus could create “room for exciting things to happen in the creative fields and the arts”, Kargman told The Times. “We have to let the air out a little bit. Let those billionaires fly to Palm Beach.”