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New York saw a 21% spike in millionaires in 2021, even as some fled
By
Jon Campbell
Published Feb 23, 2023
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By
Jon Campbell
Published Feb 23, 2023
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New York state saw a 21% spike in taxpayers who earned at least $1 million in 2021 — even as millionaires fled the state at a higher rate than the general population, according to recently released tax data.
The state Department of Taxation and Finance unveiled a new website earlier this month with a trove of data, graphs, charts and facts that show how much the state collects in taxes and who the money comes from. The release comes as Gov. Kathy Hochul and some of her fellow Democrats in the state Legislature are at odds over raising taxes on the wealthy, a move progressives have been advocating for years as a way to fund anything from education to public transit.
The most recent data from the 2021 tax year shows 84,366 New York taxpayers earning income of more than $1 million that year — a big jump from the 69,688 in 2020 and the “highest number in recent New York state history,” according to the tax department. But at the same time, 5% of million-dollar earners from 2020 left the state in 2021 — compared to 3% of all taxpayers, according to the data.
The rate of million-dollar earners leaving the state was down slightly from the early days of the COVID-19 pandemic in 2020, when 6% left the state, according to tax records. But it remains higher than pre-pandemic levels, and state Tax Commissioner Amanda Hiller told lawmakers earlier this month that her office is watching closely to see if it becomes a trend.
“One year doesn’t make a trend,” Hiller said at a Feb. 9 state budget hearing. “We know that people were responding to COVID in 2020, and we don’t know yet whether those trends are going to revert back to historic levels in 2022.”
New York’s tax structure is meant to be progressive, meaning it escalates as an individual taxpayer earns more income. That makes the state’s revenues more heavily dependent on wealthy earners.
The state collected $67.2 billion in income taxes in 2021. Of that, the 200 wealthiest taxpayers accounted for 9.5% of the total, according to the tax department. The top 50% of earners accounted for virtually all of it — or 99.3%.
In Albany, the debate over taxing the rich has regularly pitted governors against liberal-leaning Democrats, who argue that the wealthy can afford to shoulder a higher burden of responsibility for funding programs that benefit the less fortunate.
Some governors, including former Gov. Andrew Cuomo, have been wary of hiking taxes on the rich, arguing that they can easily flee to other states.
The most recent tax data, noted on Thursday by The New York Times, is likely to provide fuel to both sides of that debate — with progressives focusing on the spike in the total number of million-dollar earners, and moderates and conservatives focusing on the higher-than-average outmigration.
As part of her $227 billion state budget proposal this year, Hochul wants a three-year extension of a soon-to-expire higher tax rate on corporations with at least $5 million in annual revenue. But some legislative Democrats want her to go further by boosting the corporate tax, increasing personal income taxes on the wealthy, and taxing things like valuable inheritances.
E.J. McMahon, founding senior fellow of the Empire Center, a fiscally conservative think tank, said the latest data makes his point: The wealthy are choosing to leave the state, and that is a “danger signal the Legislature must heed.” IRS data shows New York has been home to a smaller and smaller share of million-dollar earners over the prior decade.
“It is impossible to look at these data and conclude that mega-earners are oblivious to higher taxes,” McMahon wrote in testimony to lawmakers earlier this month. “If anything, the trends suggest the centrifugal impact of the pandemic has accelerated an existing outmigration trend among income millionaires.”
The number of million-dollar earners has trended up in recent years, but 2021 marked a particularly big year-to-year spike — doubling the 11% increase from 2016 to 2017, according to the data.
Nathan Gusdorf, executive director of the Fiscal Policy Institute, a left-leaning think tank, noted the number of million-dollar earners who left the state in 2021 was about 1,500 — a 25% decline from the previous year. That’s notable, he said, because 2021 marked the last time the state increased personal income taxes on the wealthy.
“So we think this really shows people leaving during the pandemic, which everybody knows happened,” he said. “We don't think it really indicates tax-motivated migration.”
Hochul and lawmakers have until March 31 to get a new state budget in place before the start of the new fiscal year on April 1.
Tagged
new york state
taxes
economy
Kathy Hochul
Politics
Jon Campbell
Jon Campbell covers the New York State Capitol for WNYC and Gothamist. Prior to that, he covered the Capitol for more than a decade for the USA TODAY Network. He has twice earned the Walter T. Brown Memorial Award, an honor given annually by the Legislative Correspondents Association alumni for outstanding state government coverage. Jon grew up in the Buffalo area and graduated from the University at Albany. Got a tip? Email Jon at [email protected] or Signal at JonCampbellNY.90.
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