A report declaring “no statistically significant evidence of tax migration in New York” and finding “high earners’ migration rates returned to pre-Covid levels” during 2022 has a glaring problem: It relies heavily on an almost microscopic sample size of self-reported income data.

The Fiscal Policy Institute, a union-aligned research outfit, used figures collected for the Census Bureau’s American Community Survey, based on a random sample of households, to argue that recent increases in effective tax rates haven’t caused people to leave the state faster. The ACS is based on about 9,000 interviews per year in New York: Even ignoring doubts about self-reported income, whittling that group down, in multiple years, first to households in the top 1 percent of incomes and then to those that moved in the past year would have left FPI with a sample size of high-income moves that could fit around a picnic table.

Data that more accurately document taxpayer migration—and permit reasonable inferences—are those collected by the IRS and state tax departments. Data about moves that happened between 2021 and 2022—the first since Albany made the top income tax rates paid in New York City the nation’s highest—aren’t expected for months.

The authors of the FPI report say that it “dispels the myth that the rich are moving away in search of lower taxes.” But data from more definitive sources have shown multiple warning signs of taxpayer outmigration.

  • New York’s share of income millionaires has shrunk, even amid pre- and post-COVID booms in the finance sector.
  • Beyond the COVID-driven moves in 2020, the percentage of the state’s highest earners (with incomes above $25 million) moving out of the state was actually higher during 2021 than it was in 2020.
  • The average income of Florida-bound migrants from New York surged to more than $220,000 in 2021—more than double what it had been just a few years prior.

A review of tax data by state Comptroller Tom DiNapoli (hardly a right-winger) shows a continuation of a trend the Empire Center’s E.J. McMahon spotted in 2017 about high-earners appearing to limit their time in New York. DiNapoli’s analysis found almost 57 percent of tax filers with income over $1 million were non-residents—making money in New York but counting some other place as their permanent home.

As with all things migration, incentives matter. The FPI report appears to be the first volley in an effort to pressure Governor Hochul into backing off from her plan to balance the fiscal 2025 state budget without tax increases that would risk further eroding the state’s personal income tax base. Among residents, about 46 percent of the income tax is paid by the top 1 percent of earners.

Gaps between state expenses and receipts opened this year as officials hiked school aid and Medicaid spending to record levels based on optimistic tax projections that have since fallen back to Earth. FPI argued that Hochul should close the gaps with “targeted tax increases” with a focus on “increasing the overall progressivity” of the tax system.

New York risks making taxpayers leave faster by increasing their cost of living here. The state’s spending problem, on the other hand, isn’t going away any time soon.

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