A common rejoinder to Zohran Mamdani’s campaign promise to fund social programs with higher taxes was that the rich would leave New York if taxed too highly. In Vanity Fair, writer James Pogue asks skeptically if Mamdani voters, blinded by rage against the wealthy, are so disgruntled that they are “no longer interested in hearing dire predictions of what might happen if his tax increases drive wealthy residents to Florida.” The New York Post claims that the rich are already leaving; investor Bill Ackman said in an interview this summer, “If Mamdani becomes the mayor of New York, you’re going to see the flight of businesses from New York.”
The evidence for this is thin: mostly memes shared by tech and finance people, bolstered by Trump Treasury Secretary Scott Bessent musing about how the expected capital flight might be a good thing. And the claims are not limited to New York City. A decade ago, New Jersey Gov. Chris Christie declared about the rich, “Ladies and Gentlemen, if you tax them, they will leave.” When Oregon passed a wealth tax in 2010, Nike CEO Phil Knight said that the law should be called “Oregon’s Assisted Suicide Law” for the way it would create a death spiral of capital flight.
Related: Just plain everyday American socialism
Avid Ayn Rand readers will remember that this conjecture is essentially the plot of Atlas Shrugged: Tired of being exploited with high taxes, the rich go on strike and leave the world to die without their talent and money. The argument is often delivered as common sense, the grown-ups in the room revealing what is obviously true to the petulant children who want to raise taxes.
If true, millionaire tax flight would devastate a future Mamdani administration. If the rich leave, how could anything be financed? But research shows that the truth of the matter is closer to the opposite: Wealthy individuals and their income move at lower rates than other income brackets, even in response to an increase of personal income tax.
The first research comes from the Fiscal Policy Institute, which recently studied New York state tax filings from 2023 to determine how many millionaires left New York due to a personal income tax increase in 2021. They found that the top 1 percent of income earners (who make above $815,000) typically move out of the state less than any other income group. This top slice of income moved out of the state at an average rate of 0.2 percent on net.
Furthermore, when high earners leave New York, they don’t seem to do so for tax reasons. They tend to move to other comparatively high-tax states, like Connecticut, New Jersey, and California. The FPI finds that a full 72.9 percent of those with high incomes leaving New York went to high-tax states.
The New York state personal income tax increase in 2021, for joint filers earning over $2.16 million, was something of a “natural experiment.” If high-earner migration was measured before and after, it could show whether the new taxes pushed people out. But the FPI finds that this pattern, in which high earners stay in New York or move to high-tax states, was “unaffected” by the 2021 tax increase. While New York gained 17,500 high-income households over the period of 2020-2022, it only lost 2,400 (of which the pandemic must be taken into consideration).
“I am a classically trained economist and I would expect to see some response to the tax hikes,” said Emily Eisner, chief economist at the Fiscal Policy Institute, who conducted the research. That is, she would expect some amount of out-migration for tax reasons. Yet her findings contradicted this. “It is sort of stunning how little people making over a million dollars a year migrate out of New York state,” she says.
The non-flight of the rich is as true in the rest of the United States, and in many cases globally, as it is in New York. While flashy stories about the rich decamping to the British Virgin Islands, New Zealand, or Guam make headlines, the data shows that by and large wealthy people tend to stay put. This is what Cristobal Young, a professor of sociology at Cornell University, finds in his research and subsequent 2017 book The Myth of Millionaire Tax Flight: How Place Still Matters for the Rich.
In one of Young’s studies, he analyzed tax return data from every million-dollar earner across the United States for the 13 years from 1999 to 2011. He found that only about 2.4 percent of millionaires change their state of residence, which is lower than the national average (2.9 percent) and much lower than the migration rates of the middle class, which clock in at 4.5 percent. Looking globally, Young finds that 84 percent of the world’s billionaires still live in the country of their birth. It’s fairly simple: “The more people make, the less likely they are to move,” says Young.
When the rich do move, they don’t move to just any low-tax region either. They don’t move to, say, Tennessee or Wyoming. They tend to move to one place: Florida. This suggests that capital flight is less about moving for pure tax reasons than it is to find a place that combines low taxes with benefits such as a warmer climate, a preferable culture, or whatever else rich people find important.
So why don’t the rich move? Age is a dominant factor. Migration is far more common with young people, and by the time people get to their forties, regardless of education or class, they are less likely to move. Intuitively, this makes sense: Once people find work and community, it would be highly antisocial to throw that all away to save money. Regardless of the reasoning though, as Young notes, the rich move at such low rates that they don’t change the “geography of the economic elite” in America. “The more successful people are, they tend to be highly networked insiders, to have families, to have a lot of connections. And that makes you not want to move away,” says Johnson.
In fact, the story may be the polar opposite of the tale being told by conservatives and Wall Streeters: It may be that high levels of taxation draw people in. Cities and states need to attract younger people who are more mobile, but not yet high-income. They need affordable places to live, dependable public transit, and high-quality municipal services that make it possible to stay, all of which require high taxes to deliver. Some of these young people will eventually become high earners paying more in tax, but they will have benefited from quality services that helped them thrive.
Radically reducing future tax revenues, by contrast, dooms future generations and repels in-migration. Though they take advantage of it as a business tax haven, the wealthy are not moving to Wyoming in droves because decades and decades of low taxes means that there is essentially nothing there. New York and California, Johnson points out, have been high-tax states for nearly 100 years without that being a major deterrent. High taxes, paradoxically, could make a city, state, or country a more desirable place to live, refuting or at least complicating the greatest fears of those wary of a wealth tax.
“The key is making sure those revenues are used correctly and doing things that the market does not provide well,” Johnson says. He cites transportation or early-childhood education, for example, two pillars of Mamdani’s campaign. “If we can use the tax revenues to help people along in their careers, and help them raise families, it’s a great investment in the city.”
Recommended Reading