The millionaire tax threat has some New York bankers, managers, keeping an eye on the exits
© Reuters. FILE PHOTO: A woman walks past JPMorgan Chase & Co’s international headquarters on Park Avenue in New York
By Svea Herbst-Bayliss
BOSTON (Reuters) – For decades, New York bankers and fund managers have accepted the city’s high tax rates as part of their job in the world’s leading financial capital.
With plans to raise interest rates under a New York State budget agreement, some financiers are considering the outputs, encouraged by a pandemic that has shown that working on Wall Street may no longer mean working on Wall Street.
“I’m already looking for a place to live in Florida,” said a high-paid person at a world-class bank who asked not to be identified because his employer wasn’t yet aware of his plans to move.
Others, making more than $ 1 million, are considering even bolder steps, such as moving not just themselves but all of their investment firms out of town, arguing that higher taxes will limit their ability to pay employees.
A proposal that finds its way through New York lawmakers would have top earners in New York City paying up to 15.73% of combined state and city taxes.
New York State income tax rates are currently between 4% and 8.82%, and New York City taxes are between 3.08% and 3.88%, so the highest income is closer to 12.7%.
The proposal, dubbed the “millionaires tax,” would add surcharges for people who earn more than $ 1 million a year and beat the California communities to get the highest combined tax rate in the country.
Some of those who earn $ 1 million or more and place them in the higher tax bracket say the city’s cultural offerings, which have long been an ointment, take advantage of lower-tax locations like Florida, Utah, or Texas no longer prevail, especially given the success of remote working during the pandemic.
Passage seems likely
The tax proposal that is likely to pass is the culmination of a struggle between progressive and moderate Democrats. Until recently, New York Governor Andrew Cuomo opposed the millionaire tax.
Political dynamism has all but challenged the extensive lobbying efforts of corporations and wealthy individuals.
Large financial companies including Goldman Sachs Group Inc (NYSE :), Virtu Financial (NASDAQ 🙂 Inc and the hedge fund Elliott Management have already announced that they will be moving some employees out of New York.
Large companies are unlikely to be leaving their New York headquarters entirely for tax reasons, but some of their employees and smaller companies, like hedge funds that employ only dozens of people, could, the sources said. “That’s real,” said one of the smaller fund managers. “This creates an overwhelming incentive to move.”
Last month, a group of executives, including JPMorgan Chase & Co (NYSE :), Citigroup Inc (NYSE 🙂 and BlackRock Inc (NYSE 🙂 have taken the unusual step of issuing a public letter warning that if a major tax hike came to fruition, rich people would move out of New York.
Corporations may have to move employees out of New York because their top talent doesn’t want to be taxed at a high level. Some companies have already initiated moves for cost and corporate tax reasons, according to people familiar with the moves.
“When wealthy people don’t like something, they don’t protest, they just leave,” said Geoffrey Weinstein, tax attorney at Cole Schotz.
“The rich are attacked and see if there is no way to fend off 15%. They are looking for options.”