‘Taxes aren’t really high enough for them to be sensitive’: the fears of the wealthy fleeing New York and California were just that
We heard the wealthy would move out of New York City, San Francisco and Los Angeles because of an unfriendly business climate, but did they actually?
Recent IRS data contradicts the belief that raising taxes on the wealthy causes them to leave. According to the Fiscal Policy Institute's analysis of IRS Statistics of Income data, states with more progressive tax systems have higher concentrations of millionaires per filer. In fact, the number of millionaires in states like California, Connecticut, Massachusetts, New Jersey, New York, and Washington, D.C. has grown since 2010.
New York's millionaire share even increased in 2023, despite raising taxes on incomes over $1 million in 2021. Wealthy individuals, according to Emily Eisner, executive director of the Fiscal Policy Institute, "simply aren't that sensitive to the tax rates in the state" because "the taxes aren't really high enough for them to be sensitive to them."
Even after a rise in New York State's top income tax rate, the millionaire count rose by 21% to 84,366 in 2021, while the number of millionaires leaving the state fell to 1,453 from nearly 2,000 the previous year. The tax burden is felt most by families earning between $100,000 and $500,000 a year. In 2019, New York expanded its "mansion tax" on high-end property sales, but the state's millionaire population and share of the nation's millionaires continued to grow.
Despite the fear of wealthy individuals fleeing, the data shows otherwise, and some argue for a flat tax system instead.
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