You may never see another migration like you saw in 2020. The number of people leaving New York City in 2020 was breathtaking. Between January 1, and December 17, 2020, about 3.57 million mostly wealthy people left New York City.
The lost income caused by all those wealthy New Yorkers escaping the city was about $34 billion. That’s like New York losing an economy the size of the entire country of Latvia in a single year.
People were fleeing New York last year because of the pandemic, and the BLM/Antifa riots that plagued the city and others across the country.
But the flow of wealthy people leaving the city began earlier than that. After the 2017 tax reform revealed to New Yorkers the full effect of the state’s high taxes, wealthy Wall Streeters began a one-way migration toward Florida and other low tax states.
The COVID-19 pandemic and riots simply accelerated a trend that had already started. Soon Governor Andrew Cuomo was begging New Yorkers to come back.
Today, Cuomo and Joe Biden may hold the key to the future of New York, and whether or not it will ever thrive again. With both the New York state legislature and Congress writing up tax increases for Cuomo and Biden to sign, the two could kill off any desire left among the wealthy to live in New York City ever again. The New York Post’s editorial board writes:
The feds are sending New York enough billions in bailout cash to wipe out its deficits for the next two years — but the Legislature still wants needless tax hikes on “the rich.” President Biden just announced plans to do the same. It threatens a double whammy that will have even more New Yorkers eyeing the exits to Florida — taking state and city revenue with them.
The new “relief” package is sending $100 billion in aid to New York, including $12.6 billion in unrestricted funds to the state government. But Assembly Speaker Carl Heastie and state Senate Majority Leader Andrea Stewart-Cousins each want nearly $7 billion in new and increased income, corporate and wealth taxes to help cover their plans to boost outlays by more than 20 percent in the new budget due April 1.
They would raise the top income-tax rate from 8.82 to 11.85 percent, the highest since 1979; New York City residents’ top combined rate would be 15.75 percent, the highest in the country. They’d also institute a new capital-gains tax of 1 percent on million-dollar earners, reinstitute a minimum business tax on corporate capital and raise real-estate taxes by 2 percent and the corporate-franchise tax by 3 percent.
“We’re asking people who have a lot more to help a little more,” Stewart-Cousins said. For once, “asking” isn’t a complete euphemism because it’s easier than ever for people to say “no thanks” by moving away. As Kathryn Wylde of the pro-business nonprofit Partnership for New York City noted, the last such taxing frenzy in the ’70s saw the city lose “about 1 million residents and half its Fortune 500 companies.”
Since the highest-earning 5 percent of filers provide more than 60 percent of state revenue, this is no way to balance the budget.
Biden’s plans for federal tax hikes won’t help: City residents could see a top combined rate that’s through the roof. He told ABC News that “anybody making more than $400,000 [later clarified to mean family income] will see a small to a significant tax increase.” He’s also looking at raising the corporate tax rate from 21 percent to as high as 28 percent and hiking the capital-gains tax rate.
Sen. Chuck Schumer this week called JetBlue’s CEO after hearing the company may move its headquarters to Florida from Long Island City. He’d do more good by telling Biden, Heastie and Stewart-Cousins to back off on their tax hikes.
Tax increases at both the state and federal levels could kill any remaining desire the wealthy have to live in New York City.
Action Line: Don’t get trapped in a state that thinks of you as a piggy bank. Find your place in America. Start by considering a state in one of the countries “Growth Corridors.”
