From One High Tax State to Another: New York City Data Busts Millionaire Migration Myth (Again)
The idea that the wealthy will “vote with their feet” and seek lower taxes is a well-worn tale in high-cost, high-tax New Jersey. We saw the latest chapter in this fairytale play out in June, when policymakers and business lobbyists often invoked the claim that a very modest income tax increase on 0.26 percent of New Jersey taxpayers would lead to the wealthy leaving en masse, thereby decimating revenue collections and leading to further economic malaise.
But as we’ve pointed out, this tax migration myth is just that – a myth. In reality, a very small minority (less than 2 percent) of Americans relocate to a new state in any given year, and the majority of these folks do so for reasons other than taxes. What’s more, while New Jersey may indeed lose taxpayers each year – some of whom may indeed be wealthy – to retirement havens like Florida, we also gain many high-income taxpayers each and every year from New York City, as a new analysis from New York City’s Independent Budget Office shows.
First of all, only 4 percent of Gotham’s households moved out of the city in 2012, and the share of high-income households moving is the same.
Where are the wealthy New Yorkers moving? Not to tax havens, that’s for sure. The majority (42 percent) moved elsewhere in New York state, followed by 22 percent moving to New Jersey – despite our high taxes that some claim are hostile to high-income households. Twelve percent left New York City for Connecticut, followed by 9 percent who fled to California. None of these top four out-migration states could be considered a low-tax state.
And what about Florida? While overall out-migration from New York City to Florida was the third highest of all states (10 percent), it dropped to fifth highest for wealthy New York City residents (2 percent). So while Florida remains a popular migration destination for retiring folks in our region, it is due to factors beyond taxes – and it is even clearer that the Sunshine State is not stealing a large portion of the area’s wealthiest households.
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