NYC's Rich Fleeing: Will Mamdani's Tax Plan Work?

Zohran Mamdani's plan to tax the wealthy in NYC faces a major hurdle: the city's share of millionaires is shrinking rapidly. A report by the Citizens Budget Committee (CBC) reveals a nearly one-third decrease in the number of high-income taxpayers in New York State (from 12.7% to 8.7%) and a similar decline in NYC (from 6.5% to 4.2%) between 2010 and 2022.

The Exodous of the Wealthy

This exodus is costing New York dearly. The CBC estimates that if the state and city had maintained their 2010 share of millionaires, they would have received an additional $10.7 billion and $2.5 billion, respectively, in personal income tax revenue. Other states, like Florida, Texas, and California, are benefiting from this shift.

While the raw number of millionaires increased in New York due to inflation, the growth was far less significant than in other states (tripling in California and Texas, quadrupling in Florida).

Mamdani's Tax Hike Proposal

Despite this trend, Mamdani's proposal to further increase taxes on the wealthy and businesses raises serious concerns. The CBC warns that such a move could accelerate the decline in high-income taxpayers, leading to lower revenue rather than the intended increase. The report emphasizes that millionaires are crucial to New York's tax base, accounting for a substantial portion (40% in NYC) of income tax revenue despite representing less than 1% of taxpayers.

Other Contributing Factors

Other factors, such as crime rates, education quality, and overall quality of life also play a role in attracting or repelling wealthy residents and businesses. Critics point to Mamdani's stance on these issues as potentially exacerbating the problem.

The Solution: Lower Taxes?

The CBC suggests that instead of raising taxes, New York should focus on lowering them to attract and retain high-income individuals and businesses and prevent a further decline in tax revenue.