'Millionaires Tax' in NY Likely a Done Deal, Expect a Big Exodus
Millionaires Tax Slated to Pass
A proposal in the New York’s state legislature would hike the combined state and city taxes of top New York City earners from 12.7%. to 15.73%.
The bill is now expected to pass. It would leap the NYC over the top rates in California.
As acceptance of tax hikes sets in, NY Bankers and Managers Have Their Eyes on Exits.
“I’m already looking for an apartment in Florida,” said one highly paid person at a top-tier bank who asked not to be identified because his employer does not yet know of his plans to move.
Others earning more than $1 million are considering still bolder steps such as moving not only themselves but also their entire investment firms out of the city, arguing higher taxes cut into their ability to pay staff.
Large financial companies including Goldman Sachs Group Inc, Virtu Financial Inc and hedge fund Elliott Management have already said they are moving some staff out of New York.
Big companies will probably not abandon their New York headquarters for tax reasons altogether, but some of their staff and smaller firms, like hedge funds that employ only dozens of people, might, sources said.
- “This is real,” one of the smaller fund managers said. “This creates an overwhelming incentive to move.”
- “When wealthy people don’t like something, they don’t protest, they just leave,” said Geoffrey Weinstein, a tax attorney at Cole Schotz.
Add It All Up
If the bill passes as expected, add the 15.73% for state and local taxes to the top Federal Income Tax Bracket.
- Income Tax: 37.00% for taxable income above $518,400
- State and Local Taxes: 15.73% for NYC
- Sales Tax: 8.88% (Total of City, State, and County)
- Property Tax: 0.88% average effective tax for NYC, 1.69% for the rest of the state. The rate is low buy valuations are high,
That's a combined 52.73% right off the bat plus another 8.88% on every purchase.
And it won't stop there.
Progressives have their eyes on income tax hikes as well. Biden wants to hike the top rate on those making over $400,000 to 39.6% from 37.0%
He also wants to hike the rate on capital gains earnings to 39.6% from 23.8% for top earners.
Expect a Big Exodus
Those fleeing a US state for another US state cannot escape Federal Taxes but they can decide enough is enough with property taxes and state and local taxes.
Eventually enough is enough mentality will set in for New York, just as it has done for Illinois and Illinois' businesses.
And more office space will become available at lower prices resulting in less money in property taxes.
Rooting For a Big Exodus
In addition to expecting a big exodus and I am also rooting for one.
If so, NY will not raise nearly as much as they expect, if anything at all.
Escape High Tax States
Here are my personal anecdotes regarding Illinois.
Illinois, New Jersey, California, and New York have spending problems, not too few taxes.
Escape if you can.