The Empire State’s toniest tenants could be heading toward greener (and more tax-friendly) pastures.
New York’s wealthiest residents are sick of the state’s high levies, and government officials are worried that the fees may cause its most affluent to leave their homes altogether.
In a press meeting this week, state comptroller Thomas DiNapoli said on top of navigating through an economic recession, the government is already seeing an exodus of its super-wealthy individuals. The number of New York City taxpayers who earned between $1 million and $5 million decreased by 11 percent in 2020 from the previous year, according to a newly released analysis by the Independent Budget Office, an agency that tracks funds in the Big Apple.
“We might be getting near that tipping point where we do make it economically unsustainable for enough of those folks to stay here,” DiNapoli told Bloomberg. “There’s no doubt there’s been a net migration of taxpayers at the upper end. It should be a concern for everybody.”
Currently, the state is dealing with a budget deficit of $148 million for the next fiscal year. But as expenses in education, pensions and health care increase, it could cause that debt to skyrocket into the multibillion-dollar range.
The Democratic-controlled state legislature may choose to create new government services and consider raising taxes on wealthier residents to bring those ventures to life. The top 1 percent of taxpayers in New York are responsible for 40 percent of the state personal income tax revenue.
Former Governor Andrew Cuomo, along with other lawmakers, already raised state tax rates for New York’s affluent residents in 2021; now, those earning between $5 million and $25 million are taxed at 10.3 percent, with those making over $25 million set at 10.9 percent. Combined with New York City’s income-rate levy of 3.88 percent, the total tax rate for these individuals would be between 13.5 percent and 14.8 percent. That’s more than California’s 13.3 percent rate for residents with over $1 million in income—currently the highest in the nation.
While DiNapoli said the idea that most of these residents are fleeing to Florida for more sunshine and fewer taxes is “overblown,” that may not be the case. Besides offering fewer taxes and an abundance of beaches, the Sunshine State also offers prospective home buyers more space for less money.
In exclusive high-end neighborhoods such as Gables by the Sea or Fisher Island, the average home price can range from $5 million to $7 million. In places such as the luxurious Palm Island Resorts, you may need to dole out a bit more, as you can expect homes to fetch a median price of $9.6 million.
These stats pale in comparison to New York’s tony enclaves. The Upper East Side, for example, is where $8 million for a two-bedroom apartment is commonplace, and the units come with significantly less space to roam. If the tax hike does happen, trading in the concrete jungle for oceanfront vistas and a healthy dose of Vitamin D may not be such a terrible thing after all.