Between 2019 and 2020, the number of New Yorkers earning between $150,000 and $750,000 fell nearly 6%, according to the New York City Independent Budget Office.
Additionally, the number of real high earners, those earning more than $750,000, dropped by nearly 10% over the same period.
Some speculate that wealthy elites are leaving New York because of the state’s high tax rates. While it’s hard to say exactly why people are moving, the loss of high income can affect the city’s income tax revenue.
For perspective, the 41,000 taxpayers in the top 1% of the city pay more than 40% of all their income taxes. The 450,000 filers in the top 10% pay about two-thirds of all income taxes.
In other words, the remaining 90% of taxpayers contribute about a third of the city’s income tax revenue.
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The report from the city’s Independent Budget Office is not the only one that shows this migratory trend.
Fintech company SmartAsset found that in 2020, New York had a net outflow of nearly 20,000 high-income households, defined as households earning more than $200,000. That was more than any state in the study.
So where are these people moving to?
No state attracted more high-income households than the Sunshine State.
According to SmartAsset, Florida added 32,019 taxpayers who reported at least $200,000 in income in 2020. While the state also lost 11,756 of these taxpayers during the year, the end result was a net gain of 20,263 high-income taxpayers.
One of the ultra-high-income workers who moved to Florida was billionaire activist investor Carl Icahn. The 86-year-old was born in New York City and had run his business from the city for decades. He relocated his office to Sunny Isles Beach, Florida in 2020.
One obvious advantage of moving to Florida, especially for those who live in the Snowbelt, is the weather. But the main reason Florida is the top destination for high-income earners could be financial: It’s one of the few states in the country that doesn’t charge state income taxes to its residents.
Texas is another hot state that does not have a state income tax. So it’s no surprise that high-income households flock to it.
In 2020, 18,417 taxpayers who made at least $200,000 moved to Texas, while 13,061 high-income taxpayers left. Simple math shows a net gain of 5,356 high-income households for the Lone Star State.
In addition to the absence of a state income tax, Texas also attracts newcomers with its reasonable cost of living. The typical home value in Texas is $315,831 according to the Zillow real estate market, which is lower than the national average of $357,589. New York City, on the other hand, has a typical home value of $782,640.
At the same time, Texas has a booming economy and many job opportunities. According to the Texas Workforce Commission, the state leads the nation in the fastest annual job growth rate at 5.4% from October 2021 to October 2022.
With a net gain of 5,268 taxpayers with at least $200,000 in income in 2020, Arizona is the third most popular destination for high-income immigrants.
Arizona has a state income tax, but is moving toward a flat tax rate of 2.5 percent for tax year 2023. Once the new rate takes effect, the state will have the lowest flat tax in the world. country.
“It’s time to provide lasting tax relief to Arizona families and small businesses so they can keep more of their hard-earned money,” says Governor Doug Ducey. “This tax relief keeps Arizona competitive and preserves our reputation as a job magnet and opportunity generator.”
One last thing: while Florida is known as the sunshine state, Arizona gets the most sun. It receives an annual average sunlight of 5,755 kJ per square meter, more than any other state in the country.
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This article is for information only and should not be construed as advice. It is provided without warranty of any kind.