'Millionaires Tax' in NY Likely a Done Deal, Expect a Big Exodus

Mish

Progressives in New York have their eyes on what's dubbed a Millionaires Tax. Let's go over the details.

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. 

Best Quotes

  • “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.

Mish

Comments (38)
No. 1-21
BobSmith
BobSmith

Not to worry they will be replaced by hordes of third world migrants.

simb555
simb555

The only positive is Social Security and Pension/IRA income is free of state or city tax. Retired seniors with no income but large $ assets buy tax free muni bonds and avoid taxes on their bond income.

Misc
Misc

Yes, but look where it's going. NY is giving taxpayers' money away to illegals. It's only about $2.1 billion, but with more tax increases on the rich they can boost that.

Sechel
Sechel

Honestly, I don't think this pushes New Yorkers to live in Florida but it will push some to reconsider Greenwich Ct or places like Alpine NJ or Saddle River which are within easy commute of New York assuming they have business interests in the city or simply want to still take advantage of the restaurants and theater which will come back

Sechel
Sechel

If one is truly rich the income is sheltered and won't be impacted by the change in tax rates.

Zardoz
Zardoz

New York taxes are already fierce and multitudinous. I think the people that care about that are for the most part already gone.

Zardoz
Zardoz

"Biden wants to hike the top rate on those making over $400,000 to 39.6% from 37.0%"

I have absolutely no problem with this. It's them or me.

whirlaway
whirlaway

This is BS. Taxes in NY are already higher than they are in many other states. Come back when (or if ever!) the total tax receipts fall because so many of those "threatening" to leave have actually left for Podunk or Timbuctoo or whatever place they claim they will migrate to.

Greggg
Greggg

Early on New York was following them and sending tax forms. after they left. Maybe the could try and claim taxes on future earning like California.

FromBrussels
FromBrussels

Typical; the more they have, the more they want, the greedier they get ! Solidarity is such a lonely word... Billy Joel should ve sung ...

FromBrussels
FromBrussels

Stocks are flattish in Europe this morning.... Outrageous! How is that possible ? The ECB should at least talk some more stimulus or Biden spending another couple of trillion might be helpful too for a couple of days...After all it is MY future too that s in the balance, ain t it ? Clueless nitwits !

Casual_Observer
Casual_Observer

You can run but you cant hide. Federal AMT is a real thing and will come back.

KidHorn
KidHorn

Back when I worked in the financial services sector, I travelled to NYC frequently. I never understood the appeal. Everything is insanely expensive. Lower Manhattan smells bad and is insanely overcrowded. LaGuardia had to be the dumpiest airport in the world. You had to avoid rusty nails sticking out of plywood wherever you walked.

Carl_R
Carl_R

My rule of thumb has always been "Tax what you want less of." If you want to have less millionaires, make a tax specifically for them.

Tex272
Tex272

Mish, as intelligent as you seem to be, why did you not leave Ill-inois years ago?

nitts99
nitts99

I love people who talk about "the theater" as if living close is a major driver of where people live in 2021. For the very rare occasion most people attend the theater, they will just drive in. Maybe even stay at a fancy hotel. But they aren't going to spend millions in taxes just to live 20 mins closer to the theater.

Democritus
Democritus

Whatever the rate is going to be, why always that suggestion of precision? Make it 35% or 40% instead of 39.456% as if somebody really took everything into account and is a math genius on top of that.

...oh wait I'm answering my own question already...

Samtuker
Samtuker

Exodus has been ongoing and will continue. Building boom in Florida and Texas

truthseeker
truthseeker

If you check it out, nations in decline have always raised taxes more and more at the very end. So many of the problems we face right now are due to the Federal Reserve’s policies of QE and low interest rates forced upon us. If the Fed stepped back and let free market forces set interest rates now with 27 trillion of debt, interest rates would jump way up, crash leveraged equity and commodity markets and bankrupt the entire country imo. It’s going to happen anyway at some point. We should have done this back in 2008 since it would have been much less painful to allow everything to fail, and start over again debt free. Now stocks continue to make more billionaires every day, thus the fairness issue is pushing us towards unrest and socialism. If I were mayor of NYC, I would cut spending and refund the Police. Just the other day the mayor or the governor of Oregon said that defunding the police was a horrible mistake.


Global Economics

FEATURED
COMMUNITY