Decline of High-Income Earners Threatens Revenue for New York

The prospects of increasing taxes on the wealthy may be unrealistic, as data shows the number of high-income taxpayers in New York is already dwindling. Between 2010 and 2022, the portion of taxpayers earning over $1 million federal gross income decreased by nearly a third—from 12.7% to 8.7%.

Similarly, New York City’s share of such high earners fell from 6.5% to 4.2%. These losses translated into significant revenue drops, with the state missing out on approximately $10.7 billion and the city $2.5 billion in potential income tax revenue if their shares remained at 2010 levels. Meanwhile, other states like Florida, Texas, and California gained a influx of wealthy residents, tripling or quadrupling their millionaire populations due to inflation.

The exodus of high earners is partly attributed to New York’s heavy tax burden, which is among the highest in the nation. Yet, some policymakers advocate for even higher taxes on the wealthy and businesses, believing this will increase revenue. This view risks further accelerating the decline, warns experts, leading to reduced income for government budgets.

While factors such as crime, education, and quality of life also influence residence choices, critics highlight the potentially destructive effects of raising taxes. Opponents argue that policies favoring the affluent are crucial for maintaining the tax base, as high-income earners contribute a disproportionate share of revenue—44% for the state and 40% for the city—despite being less than 1% of residents.

To retain and attract the wealthy, experts suggest lowering taxes rather than increasing them, ensuring the city’s financial stability and continued growth.