{"id":137357,"date":"2026-02-18T14:16:13","date_gmt":"2026-02-18T14:16:13","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ny\/137357\/"},"modified":"2026-02-18T14:16:13","modified_gmt":"2026-02-18T14:16:13","slug":"would-raising-taxes-on-the-richest-new-yorkers-drive-them-away","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ny\/137357\/","title":{"rendered":"Would Raising Taxes on the Richest New Yorkers Drive Them Away?"},"content":{"rendered":"

New York imposes among the highest taxes in the country, and that\u2019s especially true for city dwellers, who are hit by additional local taxes.<\/p>\n

And those taxes may climb further, as Mayor Zohran Mamdani and Gov. Kathy Hochul continue to feud over whether to raise taxes and how.\u00a0<\/p>\n

Mamdani\u2019s preference is to raise income taxes on the wealthiest people \u2014 the biggest generator of revenue \u2014 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.<\/p>\n

On Tuesday, Mamdani switched tactics, threatening an across-the-board property tax increase of 9.5%<\/a> to close a budget gap, the \u201conly tools currently available\u201d to the city, he said. Hochul responded that a property tax increase isn\u2019t necessary.<\/p>\n

Mamdani\u2019s 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.\u00a0<\/p>\n

But would increases to the state\u2019s 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?<\/p>\n

\"AA shopper leaves the Herm\u00e8s luxury good store across from the Stock Exchange, Feb. 17, 2026. Credit: Ben Fractenberg\/THE CITY<\/p>\n

\u201cNo one should believe that suddenly people and businesses will leave in droves tomorrow if taxes are raised,\u201d said Andrew Rein, president of the Citizens Budget Commission, a business-funded, fiscal watchdog that opposes Mamdani\u2019s income tax plan. \u201cBut doing so does chop away at our competitive foundation over time.\u201d<\/p>\n

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.<\/p>\n

\u201cThe most powerful regional economies have high tax rates,\u201d he said, pointing to New Jersey, Massachusetts and California. \u201cBased on our research, we seem to be in a zone where you can raise the tax rates and not see any impact on relocation.\u201d<\/p>\n

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. )<\/p>\n

The key is the state\u2019s 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%.\u00a0<\/p>\n

The result is that millionaires paid 41% of all income taxes in New York, according to Tax Facts<\/a> from the state Department of Finance. The top 200,000 taxpayers paid 50%, and the bottom 50% paid a minuscule 0.2%.<\/p>\n

\u201cA lot of the debate focuses on the rate on the wealthy,\u201d said Gusdorf. \u201cThe average income tax rate in the state is actually average for the country.\u201d<\/p>\n

Because the city\u2019s tax system is less progressive, the top 1% paid about a third of city income tax revenue, according to 2023 data released last week<\/a> 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.<\/p>\n

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.<\/p>\n

The burden imposed on corporations \u2014 and the potential flight risk \u2014 is more complicated. The top corporate tax rate is 7.75%, which Mamdani wants to raise to the New Jersey level of 11.5%.<\/p>\n

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\u2019s top rate to match New Jersey would increase the combined rate in New York City to 22.48%, nearly double the Garden State.<\/p>\n

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.<\/p>\n

Academic studies don\u2019t provide a definitive answer to the question on how much taxes influence where people live and work.<\/p>\n

A 2024 report from the Tax Foundation, which is generally against high taxes, cited three academic studies that showed \u201cthe consensus in the academic literature is that high-income individuals are very sensitive totax increases.\u201d<\/p>\n

A 2023 report from the liberal Center on Budget and Policy Priorities, based on other research, is headlined \u201cState Taxes Have Minimal Impact on People\u2019s Interstate Moves.\u201d<\/p>\n

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\u2019s relative share of millionaires is declining. The same is true in the finance sector, where employment is near a record, but the city\u2019s share of that employment is at an all-time low.<\/p>\n

\"Billionaire\u2019sBillionaire\u2019s Row glimmered above Sheep Meadow in Central Park, Sept. 23, 2024. Credit: Ben Fractenberg\/THE CITY<\/p>\n

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\u2019s research director.\u00a0<\/p>\n

\u201cAll of these taxes flow through and result in lower hiring and prices. That\u2019s 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.\u201d<\/p>\n

The Fiscal Policy Institute says that low tax states also have weak economies.<\/p>\n

\u201cIf there were a strong correlation between tax rates and business environments, the Dakotas would have strong economies,\u201d Gusdorf said.<\/p>\n

However, he admits that doesn\u2019t 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.<\/p>\n

Not surprisingly, the mayor thinks higher taxes won\u2019t mean flight from the city, especially corporate relocations.<\/p>\n

\u201cI do not believe that there would be an outward migration,\u201d he told legislators on his recent visit to Albany. \u201cAnd I think that what we are facing right now is an outward migration because of the absence of an affordability agenda.\u201d<\/p>\n

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