News Summary
New York City risks losing an estimated $13 billion in tax revenue due to a declining population of wealthy individuals. Although the number of millionaires has nearly doubled since 2010, the city lags behind faster-growing states like Florida and Texas. As wealthy residents leave for states with lower taxes and better living conditions, the city’s economy could face serious repercussions if these trends continue.
New York City is facing a potentially significant financial setback as the state risks losing an estimated $13 billion in tax revenue due to a declining population of wealthy individuals. Despite nearly doubling its number of millionaire earners from 2010 to 2022, New York has fallen behind other states like Florida and Texas, which have experienced accelerated growth in their own millionaire populations.
According to a report from the Citizens Budget Commission, if New York had kept pace with other states in the growth of millionaires, the state would have generated an additional $13 billion in tax revenue in 2022 alone. This figure consists of about $10.7 billion potentially earned by the state and approximately $2.5 billion that would have contributed to the city’s finances. The report indicates that in 2021, New York could have reaped over $15.3 billion in potential taxes, bolstered significantly by substantial gains from Wall Street. This financial erosion underscores the potential impact on state and city budgets heavily reliant on income tax contributions from affluent residents.
As of 2022, millionaires, who represent just 1% of New York’s taxpayers, accounted for about 40% of the city’s personal income tax revenue and 44% of the state’s personal income tax revenue. In that year, they contributed a staggering $34 billion to both state and city coffers, with $28 billion originating from residents of New York. However, a concerning trend has emerged where the number of millionaires in New York City, once comparable to that of Florida, has drastically changed. By 2022, Florida had 56% more millionaires than New York, reflecting a broader trend of wealthy New Yorkers relocating to states with more favorable economic conditions.
The competition is particularly fierce among states for attracting affluent residents. Florida’s millionaire population has quadrupled since 2010, while Texas and California have seen their numbers increase by more than three times. In stark contrast, New York’s millionaire population grew only by 100% during the same period. As a result, New York’s ranking in the number of millionaire households has slipped from second place to fourth, surpassed by Florida and Texas, with California continuing to lead the nation despite its high tax rates.
The significant tax burden in New York, combined with factors such as rising crime rates, escalating housing costs, and changing work dynamics due to hybrid arrangements, has contributed to diminishing the state’s allure for wealthy individuals. New York currently has the highest combined income tax rates in the United States; for instance, someone with an annual income of $25 million pays a combined tax rate of 14.776%, in contrast to California’s top rate of 13.3%. These economic pressures have prompted many wealthy New Yorkers to consider relocation, often retaining properties in New York while seeking homes in places like Florida and Connecticut.
This migration trend has led to a noticeable surge in the demand for luxury properties in Connecticut, particularly in sought-after areas like Southport, as New Yorkers scout for weekend or summer residences. Real estate experts suggest that these relocations are motivated by the pursuit of a better quality of life along with lifestyle benefits, including lower taxes.
The political implications of this demographic shift have not gone unnoticed, with the upcoming mayoral election in New York becoming a focal point for heated discussions about maintaining and attracting wealthy residents. Critics of the tax policies argue that increasing taxes could amplify the outflow of millionaires, further challenging the financial fabric of the state. The Citizens Budget Commission stresses the urgency of addressing the issue of wealthy taxpayer retention, highlighting its critical importance for New York’s economic viability.
In conclusion, while New York has experienced growth in its millionaire population from 2010 to 2022, the notable lag behind competing states poses serious risks for future tax revenues, presenting financial challenges that will require strategic solutions to retain affluent taxpayers and ensure stable economic health for both the state and the city.
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Additional Resources
- The New York Times
- Wikipedia: Millionaire
- New York Post
- Google Search: New York millionaires
- Washington Examiner
- Google Scholar: New York millionaires
- Rolling Stone
- Encyclopedia Britannica: Millionaire
- The Hill
- Google News: New York millionaires tax
- Forbes
Author: STAFF HERE NEW YORK WRITER
NEW YORK STAFF WRITER The NEW YORK STAFF WRITER represents the experienced team at HERENewYork.com, your go-to source for actionable local news and information in New York, the five boroughs, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as New York Fashion Week, Macy's Thanksgiving Day Parade, and Tribeca Film Festival. Our coverage extends to key organizations like the Greater New York Chamber of Commerce and United Way of New York, plus leading businesses in finance and media that power the local economy such as JPMorgan Chase, Goldman Sachs, and Bloomberg. As part of the broader HERE network, including HEREBuffalo.com, we provide comprehensive, credible insights into New York's dynamic landscape.
