After months of experts predicting that the federal tax overhaul in December 2017 would induce the wealthiest New Yorkers to leave for cheaper states, the early days of summer are offering some clues about what will actually happen.
The tax debate returned to the forefront of the news earlier last week, when President Donald Trump started a Twitter battle with Gov. Andrew Cuomo, arguing that “it is very hard and expensive to live in New York” because of the state’s “ridiculously high taxes.” Cuomo countered that he had in fact lowered taxes, and although he previously acknowledged that the levies are a burden, he asserted that changes in federal tax law limiting deductions of state and local tax payments on federal returns risked sparking an “economic civil war.”
E.J. McMahon, research director at the Empire Center for Public Policy, had presented estimates to the joint legislative fiscal committees earlier this year on the potential consequences of departures. He predicted that if the state lost 10% of residents with median adjusted gross income of more than $10 million, New York would lose $265 million in tax revenue, more than the entire state-funded budget for the Department of Environmental Conservation. (The total state budget is $175 billion.)
But even though the wealthy don’t like to pay New York taxes, that’s not stopping them from moving here and generating more money for the state. Late last month both Kevin Durant and Kyrie Irving signed with the Brooklyn Nets—a hopeful sign for economic observers who recognize the players had the option to head to states with much lower tax rates.
For now New Yorkers are waiting for more definitive figures about whether rising taxes have motivated wealthy New Yorkers to flee. “I don’t have any real evidence of that kind of flight,” Comptroller Scott Stringer said at a recent Citizens Budget Committee breakfast. “I’m not saying it’s not happening. But we don’t have it yet.”
© 2019 Crains New York Business
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