New IRS data suggests otherwise.<\/p>\n
According to a Fiscal Policy Institute<\/a> analysis of IRS Statistics of Income data, the states with the most progressive tax systems have the highest concentration of millionaires per filer in the country. The number of millionaires within those states (California, Connecticut, Massachusetts, New Jersey, New York, and Washington, D.C) has also grown since 2010. <\/p>\n New York\u2019s millionaire share rose again in 2023, the most recent year of data available, even after the state raised its rate on incomes over $1 million in 2021. Florida saw a notable decline in its millionaire share that same year.<\/p>\n \u201cWe\u2019re just really not seeing any declines in the millionaire population in New York State,\u201d Emily Eisner, executive director of the Fiscal Policy Institute, told Fortune. She said millionaire households \u201csimply just aren\u2019t that sensitive to the tax rates in the state\u201d because, for them, \u201cthe taxes aren\u2019t really high enough for them to be sensitive to them.\u201d <\/p>\n Where it does fall, the tax burden lands hardest on families earning between $100,000 and $500,000 a year. \u201cIt\u2019s tough living in New York City,\u201d Eisner said. \u201cYou\u2019re making a lot of money relative to the population of the United States, but in New York City, you don\u2019t feel rich at all. You still feel squeezed.\u201d<\/p>\n In 2016, New York state\u2019s Department of Taxation and Finance counted 57,126 million-dollar earners, but that grew to 68,068 by 2019, according to an FPI fact sheet<\/a>. Then in 2021, when the state raised taxes on those earning over $1 million, the millionaire count jumped 21% to 84,366. That same year, the number of millionaires who left the state fell, to 1,453 from nearly 2,000 the year before. (To be sure, New York\u2019s share of the nation\u2019s total millionaires slipped even as its raw count grows, since other states are adding them faster).<\/p>\n It wasn\u2019t just income tax. In 2019, New York expanded its \u201cmansion tax,\u201d<\/a> a transfer tax on New York City home sales over $1 million, adding a progressive scale that rises to 3.9% on sales above $25 million. New York\u2019s millionaire count and its share of the nation\u2019s millionaires both kept climbing since 2019, even as the tax on high-end property sales went up.<\/p>\n Flat tax debate<\/p>\n Still, threats to leave are the predictable response whenever a state floats taxing the wealthy. Ahead of California\u2019s 2012 vote to raise its top rate to 13.3%, opponents said the rich were already packing. Instead, a Stanford-led study found about 138 high-net-worth<\/a> Californians left in the year after the tax passed, just 0.04% of the 312,000 subject to it. The FPI report shows the state\u2019s millionaire population has kept growing overall.<\/p>\n It seems to be a pattern: in New York this year after the city unveiled a pied-\u00e0-terre tax<\/a>, Ken Griffin\u2019s Citadel initially hinted it might abandon its planned $6 billion Park Avenue office tower in response to video from the city\u2019s mayor calling out Griffin\u2019s apartment. By August, Citadel confirmed it was staying<\/a>, with demolition already underway at the tower site.<\/p>\n Still, some folks are arguing for an alternative to a graduated tax system. A Cato Institute briefing paper<\/a> published this month found that states converting from graduated to flat income tax systems saw roughly 1 percentage point faster per capita income and GDP growth for five to seven years after the reform, or nearly $4,000 more income per resident. (The results are insignificant after year 10, so the boost is only seen for at most six years). \u201cStates tend to grow about a percentage point faster for five, six years, and then they return to trend,\u201d the paper\u2019s author, Adam N. Michel, told Fortune.<\/p>\n