Recent IRS data shows that New York's wealthiest residents are not leaving in mass despite 2022 tax hikes. In fact, the number of millionaires in the state increased, contradicting predictions of a capital flight.
The 3% growth in New York's millionaire population
Contrary to the narrative of a wealthy exodus, the population of New Yorkers earning over one million dollars expanded by roughly 3% following the 2022 tax reforms. According to the report, New York recorded an increase of 2,000 millionaires in 2023 relative to the previous year, a trend that diverged from a general decline in millionaires across the United States.
The growth was not limited to the ultra-wealthy.. The report notes that the number of individuals earning between $500,000 and one million dollars rose by more than 8,500 people, representing a percentage increase of over 7% for that specific income bracket.
Bill Ackman and John Catsimatidis vs. the IRS data
The data stands in direct opposition to warnings from prominent figures like hedge-fund manager Bill Ackman and grocery executive John Catsimatidis. ackman had previously suggested that the departure of a few high-earners could destabilize the city's tax base, while Catsimatidis pointed to Florida's lack of state income tax as a "promised land" that would lure New York's elite.
However, the federal figures suggest these warnings were premature. as the source notes, the actual movement of wealth does not support the claim that marginal tax increases automatically trigger a mass migration of the affluent to low-tax jurisdictions.
Why the average income of New York departures dropped to $107,000
Analysis of those who did leave New York between 2022 and 2023 reveals a telling shift in demographics. The average income of residents moving out of the state fell from over $125,000 to approximately $107,000 during that period.
This downward trend in the income of emigrants suggests that the wealthiest residents are actually the most likely to stay.. The data implies that the "flight" being discussed in political circles is primarily composed of middle-to-upper-middle-class residents rather than the millionaires whose tax contributions are most vital to the state budget.
The cultural and business gravity of New York City's economy
Lindsay Owens, the president and CEO of Groundwork Collaborative, argues that the fear of tax flight is a myth. Owens suggests that the unique business and cultural ecosystem of New York City creates a level of loyalty and utility that outweighs the burden of modest tax increases.
The resilience of the New York City economy is anchored by its status as a global hub for media, tourism, and higher education. This concentration of creative and financial talent makes the city an indispensable node in the national economy, ensuring that the billion-dollar tax base remains stable even when a small number of wealthy individuals relocate.
The missing data on second homes valued over $5 million
While the general millionaire population grew, there are still specific gaps in the available data. The 2022 tax changes included a new levy specifically targeting second homes valued at more than $5 million, but the report does not specify if owners of these luxury properties reacted differently than primary residents.
It remains unclear whether the growth in millionaires was offset by a loss of non-resident property owners or if the tax on high-value second homes failed to deter investment. Additionally, the source relies on IRS data from a specific window, leeaving open the question of whether long-term migration patterns will shift as the full impact of the 2022 reforms is felt over several tax cycles.
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