New York, host to 90 billionaires and 30 thousand millionaires, might see their population bump down after the city proposed a tax-rate increase as a part of their recently published $212 billion budget deal.
The revised top tax rate of 13.5% to 14.8% suggests that New York will lead the tax-chart for millionaires in the nation. Adding the federal taxes, which have also increased to 28% under the Biden administration, the millionaires would have to pay up to 51.8% to stay in New York.
Under the new proposal, the top tax rate would temporarily increase to 9.65% from 8.82% for single filers earning more than $1.1 million. Tax rate for income between $5 million and $25 million would rise to 10.3%, while for more than $25 million it would be 10.9%. The new rates would expire in 2027.
In a bid to woo wealthy New Yorkers to return to Manhattan, Governor Andrew Cuomo had said in August last year, “We’ll go to dinner, I’ll buy you a drink, come over, I’ll cook.”
However, the vice president of State Projects at the conservative Tax Foundation, Jared Walczak, believes, “High earners in particular have considerable flexibility, and many already temporarily relocated during the pandemic. Raising tax rates on the most mobile cohort of taxpayers is a good way to lose many of them outright.”
During the pandemic, many of the highest earners of the city fled to parts of the state where taxes are less. The top 1% of New York paid $4.9 billion in taxes in 2018, 42.5% of the total tax collected by the city governance. According to Bloomberg, the number can get hit severely with the introduction of the new tax rates.
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