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
Exodus has been ongoing and will continue. Building boom in Florida and Texas
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…
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.
Mish, as intelligent as you seem to be, why did you not leave Ill-inois years ago?
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.
California passed a tax specifically for millionaires in 2012. Now, there are a lot more millionaires living in the state.
Come on. Every state has more millionaires then in 2012. Thanks to money printing.
And California’s income tax receipts increased from 55B to 100B+.
You keep saying “Boo!” though. But BS arguments like yours no longer sell – except to those who are already in the choir.
Does Cali have more millionaires because there are a lot more paper millionaires due to property / 401K values increasing? Or actual millionaires making 500+K a year that get taxed due to this new tax?
Your link just shows tax revenues but no breakdown of who paid what. It could very well be that the massive increase is just poor and middle class people paying more due to their salary increase (ie 15 min wage) and property tax increases due to rising real estate values.
A lot of people are cheering on the end of Trumps corp tax cut as some kind of billionaire tax hike. Yes, they will definitely pay more. But you know who else is going to pay? The middle class. As in every small business owner. Everyone who owns stock in their 401K (which is mostly middle class) as dividends will be reduced and stock values will eventually correct for less profits. So if you are any of the people I listed, Biden’s tax is also going to hit you every bit as hard as it hits the Bezo’s and Musks of the world.
But, do they have less that they otherwise would have? Probably. The fact that they did not get an absolute decrease, however, is a sign that their tax was not excessive.
There are reasons why people would want to live in California, and they will pay some amount for the privilege. Similarly, there reasons why people would want to live in New York. On the other hand, there is always a breaking point, and Chicago seems to have reached it, and New York seems to be close. California does not appear to have reached it yet, but that doesn’t mean there isn’t a breaking point.
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.
I have worked there and as with any megacity city you need gobs of money to fully take advantage of what it can offer. It’s dirty and gritty because it is a city that works and not one of those cute museum-Disneyland cities that some people seem to like. It has more energy than any city I have been to and for culture it is above all. NYC will be diminished by the new taxes but it will claw its way back up. Granted it’s not a place to retire to but it never was.
My kids live in Woodside, an old Irish neighborhood in Queens that is now a predominantly Asian neighborhood….they are professional jazz musicians, and there simply is no other place like NYC for musicians……I don’t expect that to change.
One of my daughters lives in Brooklyn. Although she and her husband are not in the arts, they hang out with many. At a party they gave a few years ago I talked to their artist friends from California and they told me that the art scene in NY is 20 times better and they were native Californians. When we go there we always have a good time. I like New York and New Yorkers once you get to know them.
How taxes turned margarine pink, made ships sink, and more strange results link to nypost.com
You can run but you cant hide. Federal AMT is a real thing and will come back.
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 !
Typical; the more they have, the more they want, the greedier they get ! Solidarity is such a lonely word… Billy Joel should ve sung …
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.
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.
“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.
Besides, these “smart” people’s predictions have crashed and burned so many times that I don’t think anybody outside their choir believes their nonsense anymore.
In 2012, when California passed the “millionaires’ tax” via Prop 30. What happened since then? Total income tax revenues went UP from 55B in 2012 to 100B in 2019.
There sure as heck aren’t any few millionaires in California.
It’s them or me” so true
The rich, having stolen everything in the country, whine and flee when asked to support what’s left of society after their plundering.
Sorry Mish- you’re wrong on this one……
From “Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich–and Cheat E verybody Else”:
“Tax policies and their enforcement have become a disaster, and thanks to discreet lobbying by a segment of the top 1 percent, Washington is reluctant or unable to fix them. The corporate income tax, the estate tax, and the gift tax have been largely ignored by the media. But the cumulative results are remarkable: today someone who earns a yearly salary of $60,000 pays a larger percentage of his income in taxes than the four hundred richest Americans.”
That was in 2005. And if anything, the picture is a lot more bleaker now than it was then.
New York taxes are already fierce and multitudinous. I think the people that care about that are for the most part already gone.
If one is truly rich the income is sheltered and won’t be impacted by the change in tax rates.
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
If the earn money in NY, they have to pay NY tax even if they live in Connecticut.,
Companies just need an office in the state where the employer states where they work. They dont actually have to work there.
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.
That’s not NY money though, it came from the Fed blue-state bailout.
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.
They get their 2% annual return tax free. Woo hoo.
The tax exemption of pension/IRA income in NY state is limited to $20,000 per taxpayer per year. This not very much for the very high income folks. Muni bond yields are very low these days and have been for the past decade.
Liberals will destroy their states over a short time there is something wrong with them. This one is for you Mish, but, but, but Tariffs are bad, I don’t agree. link to zerohedge.com
Not to worry they will be replaced by hordes of third world migrants.