Yves here. Your humble blogger is too far removed from the very rich in New York or for that matter, much of anywhere to have direct insight into the headline question. But we live in a world where the concentration of income and assets of billionaires keep rising. This of course further strengthens their ability to get policies that increase their advantage. They live in a world removed from the lower orders. Flying in private jets only dimly gives a sense of their distance. There are increasingly eateries that offer curated experiences for the top wealthy. They see Dr. Moonbeams who supervise life extension experiments like getting regular transfusions from young adults. But theses lifestyles also increasingly include panic rooms and bunkered compounds.
So why would the super wealthy, top professionals, and corporate execs remain in New York if Mamdani raises taxes? The New York City corporation tax was already stiff. Raising that would drive some businesses out. But I am not sure the picture is as clear cut for individuals. Big cities have big network effects. For those with the means, New York offers elite schools, opera, ballet, the symphony and theater (but the latter is not what it used to be). It is also a foodie paradise.
It also has top doctors. Even if the rich like their longevity charlatans, if you have a serious condition, you want a practitioner who has treated it a lot, and that means someone who treats more than just rich patients. I’ve been told by someone from a family of doctors that the dirty secret of concierge practitioners is that they are usually not as good as mainstream practitioners. Among other reasons is that to justify there charges, they do a lot of handholding as opposed to treatment (as in their practices have a high level of the worried well). An example of the importance value of treating less well off patients: when Ronald Reagan was shot, the head surgeon at the hospital wanted to operate on him. He was persuaded to let an ER surgeon take charge instead because he had far and away operated on the most gunshot wound cases.
Even with post-Covid diminishment, New York City still is the place to be for many top professionals in the US, in finance, law, consulting, and other fields. High level selling still happens largely in person. Complex negotiations can’t be done well by Zoom, nor can those often tedious big corporate meetings to hash out strategies. And some things are best done face to face for confidentiality reasons.
New York, like California, also makes it hard to dis-establish yourself as a tax resident, particularly if you still own or lease a residence there.
Now, Mamdani might not get his income and corporate taxes passed. And it may be that a lot of the very well off do leave. But on its face, this is not as risky a move as it might seem.
By Greg David. Originally published at THE CITY on Feb. 18, 2026
New York imposes among the highest taxes in the country, and that’s especially true for city dwellers, who are hit by additional local taxes.
And those taxes may climb further, as Mayor Zohran Mamdani and Gov. Kathy Hochul continue to feud over whether to raise taxes and how.
Mamdani’s preference is to raise income taxes on the wealthiest people — the biggest generator of revenue — and on corporations. But for that to happen, he would need Albany to sign off, and Hochul has long said those tax hikes are off the table, even as she recently gifted the city an additional $1.5 billion in state aid over the next two years.
On Tuesday, Mamdani switched tactics, threatening an across-the-board property tax increase of 9.5% to close a budget gap, the “only tools currently available” to the city, he said. Hochul responded that a property tax increase isn’t necessary.
Mamdani’s preferred route is undoubtedly the more progressive, hitting high-earners and corporate profits, while a blanket property tax hike would elicit more broad political outcry because of the widespread pain it would bring.
But would increases to the state’s already high taxes send the wealthiest residents and biggest businesses to other states? Or would they just be accepted as part of doing business in the financial capital of the global economy?
“No one should believe that suddenly people and businesses will leave in droves tomorrow if taxes are raised,” said Andrew Rein, president of the Citizens Budget Commission, a business-funded, fiscal watchdog that opposes Mamdani’s income tax plan. “But doing so does chop away at our competitive foundation over time.”
Not so, says Nathan Gusdorf, executive director of the Fiscal Policy Institute, a progressive group that supports Mamdani and has been calling for income and corporate tax increases for several years.
“The most powerful regional economies have high tax rates,” he said, pointing to New Jersey, Massachusetts and California. “Based on our research, we seem to be in a zone where you can raise the tax rates and not see any impact on relocation.”
One way to assess the total tax burden is to take the average of state and local taxes and divide that number by per capita income, which is what the Tax Foundation does. By that measure, the average New Yorker pays 15.9% of their income in state and local taxes, long the highest in the nation. (Tax data lags so this number is for 2022, and other numbers in this story are one-to-three years old. )
The key is the state’s income tax, which reaches 10.9% for those making more than $25 million, third highest behind California and Hawaii. But New York City residents making more than $90,000 pay an additional 3.876% on top of the state rate. The combined rate for the highest earners in the city (14.8%) tops the nation, with California second at 13%.
The result is that millionaires paid 41% of all income taxes in New York, according to Tax Facts from the state Department of Finance. The top 200,000 taxpayers paid 50%, and the bottom 50% paid a minuscule 0.2%.
“A lot of the debate focuses on the rate on the wealthy,” said Gusdorf. “The average income tax rate in the state is actually average for the country.”
Because the city’s tax system is less progressive, the top 1% paid about a third of city income tax revenue, according to 2023 data released last week by the Independent Budget Office. The IBO study found that it took an income of $906,677 to be in the top 1% in that year, and the number of millionaires in the city, about 34,000, has remained relatively stable since 2020, despite the high tax rate.
When it comes to fairness, New York State boasts the fourth most progressive tax system in the country, according to the Institute on Taxation and Economic Policy, behind only D.C., Minnesota and Vermont.
The burden imposed on corporations — and the potential flight risk — is more complicated. The top corporate tax rate is 7.75%, which Mamdani wants to raise to the New Jersey level of 11.5%.
A recent study by the Citizens Budget Commission showed that the rate for city business is already 17.44% since they pay city and MTA taxes. Raising New York State’s top rate to match New Jersey would increase the combined rate in New York City to 22.48%, nearly double the Garden State.
But under 2015 reforms, businesses pay those taxes on sales within the state, so relocating a headquarters elsewhere does not lower the amount owed New York, which collected about $20 billion in the last fiscal year.
Academic studies don’t provide a definitive answer to the question on how much taxes influence where people live and work.
A 2024 report from the Tax Foundation, which is generally against high taxes, cited three academic studies that showed “the consensus in the academic literature is that high-income individuals are very sensitive totax increases.”
A 2023 report from the liberal Center on Budget and Policy Priorities, based on other research, is headlined “State Taxes Have Minimal Impact on People’s Interstate Moves.”
In making the case that taxes matter, the CBC points to studies of millionaires. The number of millionaires in New York is growing, but less than elsewhere in the country, so New York’s relative share of millionaires is declining. The same is true in the finance sector, where employment is near a record, but the city’s share of that employment is at an all-time low.
When executives decide where to locate their companies, they are thinking of the tax burden on their employees as well as the company itself, argues Ana Champeny, CBC’s research director.
“All of these taxes flow through and result in lower hiring and prices. That’s why I pay less for groceries in the suburbs where I live than I would in the city and why we are seeing a shift out of people.”
The Fiscal Policy Institute says that low tax states also have weak economies.
“If there were a strong correlation between tax rates and business environments, the Dakotas would have strong economies,” Gusdorf said.
However, he admits that doesn’t apply to Texas and Florida, which are both fast-growing economies, especially in financial services. Texas ranks sixth lowest in the Tax Foundation ranking and Florida is eleventh.
Not surprisingly, the mayor thinks higher taxes won’t mean flight from the city, especially corporate relocations.
“I do not believe that there would be an outward migration,” he told legislators on his recent visit to Albany. “And I think that what we are facing right now is an outward migration because of the absence of an affordability agenda.”
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Mamdani may be playing with fire here. Given the preponderance of local taxes paid by the extravagantly wealthy in New York, if even a handful of gazillionaires quit Gotham due to higher taxes, the impact on revenue is likely to be serious. Counting the numbers of rich tax refugees is not meaningful. The important question is how much taxbase leaves.
Why would a wealthy person chose to live in New York, Dubai or, for that matter, London? Financial hubs, network proximity, culture, abundant business opportunity and fast moving capital flows if it cost more?. It’s called premium. The extra one pays to get the extra opportunity. The wealthy also work to influence the rules so they get discount tickets for the ride on the abundant infrastructure.
There is always a balance in marginal returns. So someone on the edge of that decides to move on. Well they have to liquidate certain things. For every seller of a mansion there’s a buyer. Maybe they sell at a loss. Too bad, that’s called repricing but a new billionaire will move up, or in. NY will not become a dystopian hell hole. And the billionaires that move to Texas, ha ha, good riddance. California lost Elon Musk to Texas and we are soo sad. So long Elon, don’t let the door hit you in the a$$.
News stories showed that California lost about $1 trillion dollars in wealth, largely driven by their tax policies. Those Silicon Valley techies and their tax payments will be sorely missed especially in the time of budget deficits.
Less mobile, less wealthy people have fewer options and will see higher taxes as the pie gets smaller but the Newsom appetite doesn’t. Trains to nowhere and other wish list items don’t reflect reality but that never stopped him.
Setting aside the economic model you’re implying, I can believe California has problems. But maybe a lot of that is California just being California? It’s a very different animal from the Atlantic states, especially the Northeast.
SoCal in particular has always been a starry-eyed, boom-bust place, where trying to draw in hot money & trends is arguably in the cultural DNA. My impression of NYC is almost the polar opposite. The Big Apple makes its own circumstances, and I think as Yves has suggested in other contexts, even if it fails at times, NY is probably one of the most capable administrative states in the Union.
Like the others are saying, I think a lot of New Yorkers realize much of their true wealth comes from being New Yorkers. And if any city in America can treat its less rooted elites as expendable, NYC would be it.
I See, you hate Newsom. The train connecting LA to San Francisco was not remotely Newsom’s idea. It probably originated in Pat Brown’s admin, what 75 years ago. All part of the build out of infrastructure that benefits mostly business interests. Of course the traffic on the coast is horrific but we don’t want no trains.
Equating wealth with dollars is also a tell that you listen to right wing radio. CA is a beautiful state but I don’t live in Encino or Bakersfield. I will happily pay twice the taxes here to not live in Kansas where, by the way, austerity politics have made that state soo desirable. The wealth lobby in CA used to be diary and mortician’s. That was awful but mundane. The new silicon valley rich are obnoxious proto fascists. I’m willing to give them the trillion dollars to go away and make San Francisco affordable
The LA to SF high speed rail is former governor Jerry Brown’s, the son of Pat Brown, dream project.
If the very wealthy left NYC, who would miss them? They move in their own circles in near complete separation from the rest of us. As a class, they are not especially nice or considerate. Regard how they treat those who service them.
Evidence from the great state of Massachusetts would indicate “no”. We have a millionaires tax and they have all stayed. Hmmm…
I suspect that this tax on ‘the wealthy’ will only hit the upper middle class, the highest earning professionals and small/medium business owners. My understanding is that the true rich often hardly pay any taxes at all, it’s all laundered and overseas and complicated capital gains shenanigans, stuff like that. Anybody read the June 8, 2021 article in ProPublica?
Hmm… the super rich get off largely Scott free, and their servants and maids are hardly taxed at all. What’s not to like?
The city’s very wealthy residents won’t leave.
The large corporations can move to Jersey and shake down Jersey’s residents.
The city can expropriate corporate property by eminent domain and wish them well in their new location.
I always see these stats about how much the wealthy pay in taxes and how much “wealth” a city or state loses if they leave. What I never see is data on how much they cost to keep (Subsidies, tax breaks, mis aligned resource use, loss of affordable housing, gentrification, increased policing and need for incarceration etc.
I know this is technically asking for doing homework and thus against site rules but does anyone know a decent starting place to research what the “wealthy” actually cost to keep around.
Perhaps those studies about “the benefits” that giant sports teams allegedly bring to cities/regions would be a place to start. That seems like a good example of how places give massive amounts of taxpayer money to fabulously wealthy people and often get little to none of the claimed benefits of having the wealthy (or their operations) around. Tax exemptions, free land from eminent domain, new roads to service the facility, etc and little of the money seems to bring actual benefits to the local economy/citizens.
It seems this is the big question of our time. How do we manage to obtain the revenue needed at the state and local levels to accomplish what we need to do? And how do we do that when our tax codes were written to handle earners and not owners?
Yves has written many times how inefficient and ineffectual a wealth tax would be. We’re all living with the absurdity from the last time we tried to do something special just for rich people, which is why the middle class now have to calculate their Alternative Minimum Tax. And then there’s what the revenue goes towards. Progressives sneer at people who complain about taxes and snidely comment that people in red states don’t want to pay taxes but they want fire fighters and national parks. Of course, most of our taxes don’t go to those items and somehow the money we’re supposed to allocate to them never quite gets there. So what do we do with this mess?
I feel like charging usage fees is where we’ll have to go. You want the US government to protect your patents? Cool – here’s the minimum fee. You want the Coast Guard to help your yacht? Great, happy to do it, here’s your fee. VAT would kill us and the rich would be able to game it anyway. But perhaps a fee charged for people who rely on the SEC to protect them would work?
Don’t the rich ones already live in off-shore LLCs for tax purposes?
There is an assumption here, that the rich leaving is a bad thing. When the rich leave, the spaces that they previously occupied become available, and are used in a way that is not quite so inefficient.
If the exodus by the wealthy is relatively large, the cost of living will fall for the rest of population.
I give you the example of Rush Limbaugh’s old New York apartment. (You can see the floor plan and interior photos here, it’s hideous)
I realized that when he left, the apartment could be subdivided into at least 4 other apartments, and mere millionaires would be happy in each of those, and their old apartments could be further subdivided and given to almost as rich folks, and if this occurs on a large enough scale, it drives the price of housing to ordinary people.
Also, many of the “Rich” who might be leaving are using their New York real estate as a form of money laundering, (Not as much as London, though) and bring nothing to the city but higher housing prices.
The rich leaving would have the effect of making New York a more affordable place, and that is a good thing.
The problem is that the budget of New York City is HIGHLY dependent on the taxes paid by the rich. I don’t have current figures but I am told the direction of this profile is still accurate. In the later 1980s, 50% of city revenues came from 10,000 taxpayers.
State Taxes Have a Negligible Impact on Americans’ Interstate Moves
In my opinion property tax is the worse thing Mandabi should do. This will destroy alot of working class people lives. In my opinion just couple percentage increase in payroll and Capital gains tax would bring in billions of dollar. With that money create own infrastructure company. This company would build tens of thousands rent houses and in return bring down property price .
A colleague’s reaction to this: “We in the middle class always get stuck with the bill.”
Which begs the question: What is the middle class? My current family income is at least triple the median family income in my home state. His is considerably more and includes a “second home” owned free and clear at the beach, and he sent his children to the local “Top-20” private university (that no one east of the Mississippi River and south of the Ohio River has every heard of) paying the rack rate, because the two state-supported top-level research universities “were not good enough” despite being “tuition-free” to his children. Whatever we are, in the “middle” we are not. Will no one rid us of the oblivious but very performative PMC?
This is a nuanced article showcasing this isn’t as cut and dried and those crying wolf would have you believe. One thing is certain, New Yorkers knew what they were voting for.
Anyway, since comments are for opinions, then mine is the new mayor should be shown the grace by those on the right to enact his agenda and prove the socialist case. But I suspect, instead, they will show the same lack, which those on the left have granted the President, to enact his.
How I wish we could at least accept the will of the voters by giving the other team the chance to put in place the measures they ran on and, which got them elected. After all, it’s a chance they earned. Doubt it happens in my lifetime.
So first, right now Mamdani is in the negotiations phase with Hochul (as is made clear by multiple other recent stories in The City, for instance). The state budget comes out April 1, the city budget is due in June, so trying to soft-blackmail Hochul “give us money in the state budget or I’ll have to raise property taxes ahead of *your* election in the fall” is a thing. [And Hochul, apparently, has already said something about putting in $1.5 billion for NYC, including $500 million in recurring payments.]
And there are yet a lot of moving parts. The mayor’s preliminary budget proposal is due in a matter of days, so we’ll see stuff there. City agencies are supposed to report on their cost savings potential a month from now, so that’s another datapoint. And then, of course, April 1. There’ll be a lot of noise in the interim, but I suspect there’ll be a lot of compromising and not quite so much of tax-raising in the end. But we’ll see.
Second, from the limited info released so far, Mamdani is going to try to “reform” property taxes in any event. There was a talking point floating around in the local press about how, in some fashion, “black” neighborhoods end up paying proportionately more than “white” neighborhoods, which means – somehow, I haven’t myself seen any figures yet – there must be a “rebalancing” of the tax burden. This is separate from increasing the property tax revenues as a whole, you understand, but will also invariably be painted as a tax increase by the right, in fact, right-wing bloggers on Youtube and Rumble are already slipping that into their videos, at least some of them.
Third, you can’t just say “the rich”. You have to tier them, just like one would with “capitalists” or “the working class”. For instance, in Manhattan, which I’ve fled fairly recently due to the stupefying rise in the cost of living, you have:
– Foreign oligarchs who’ve bought super-expensive (8-figures) appartments that they hardly ever visit. Walk by those skyscrapers at night, and most of the windows are dark. These people don’t care, they want a pied-a-terre in NYC. And in London. And so forth. But they also won’t pay the local income taxes, just the property-related ones.
– Domestic super-millionaires and billionaires. I guess some of these could leave to make a political statement. But most of them have lodgements in 10-15 different places around the world, no reason not to have NYC be one of them. For prestige reasons, if nothing else. And again, I suspect they’d only care about property, not income taxes.
– Goldman Sachs MD types (7 figures). These are the bulk of the 27 or 29 thousand “million dollars per year or more” incomes in the city. Except that a chunk of them already live in New Jersey, Long Island or Scarsdale (a bit north of the city), and so could maybe be hit by statewide tax increases, but not by necessarily by city property taxes. My personal interaction with this cohort has been limited, and mostly to the lawyer-doctor types (not financiers), so I have no idea how they’ll react. I doubt they’ll move from, say, Scarsdale to New Jersey; maybe from Manhattan to Scarsdale though, that’s a bit more viable. But because they literally have to be in the city one way or the other to make their seven figures, I am guessing this is the “stickiest” cohort of them all.
– Six figure or very low sevens professionals (lawyers, doctors, hedgies, etc.). I think this is the crowd that a) has already been fleeing Manhattan, at least for the outer boroughs if not further, and b) will be most likely to move, not immediately, but massively, as a consequence of property tax increases. Not so much income (Mamdani’s proposal is for millionaires, not six figures), but a bunch of these guys and gals have bought apartments or houses in “good neighborhoods” (read – expensive, with loads of equally expensive private schools for little Madison), and are the ones with the least slack in terms of disposable income because heaven forbid little Madison does not go to her private school (with her very own non-white nanny – wealthy Manhattanites seemingly prefer Afro-Caribbean for that, from personal observation). I am not trying to be snarky (as if I need to try), but there are specific expenditure types and levels that most of these six-figure families are sticking to, in my experience, and then they all complain about not having very much in true disposable income left at the end of the day.
I guess all a long way of saying, a statewide income tax will probably not result in quite as much displacement as a citywide property tax. Maybe. We won’t know until we try, however…and as I tried to hint at the top of this post, I suspect there will be more posturing by both Mamdani (whom I do not view as left-left leftie leftist, but more of a social-democrat type), and by Hochul, who might have faced a pretty tough primary (from a committed Zionist, no less!) if not for Mamdani’s recent endorsement.
This happened in Chicago several years ago. Berrios, the old assessor, got beaten in the election by Kaegi, who reassessed the North Side (whiter and richer) much higher, and gave some relief to the South Side (poorer and Blacker).
Yes, there was a lot of whining about it from the usual suspects.
The lying propaganda about how the rich are going to leave if you raise their taxes is constant. Don’t believe any of it.
The Myth of Millionaire Tax Flight: How Place Still Matters for the Rich
https://www.goodreads.com/book/show/34556715-the-myth-of-millionaire-tax-flight