The ‘millionaire tax’ threat has some New York bankers and managers watching the exits

BOSTON (Reuters) – For decades, New York bankers and fund managers have accepted the city’s high tax rates as part of the job in the world’s leading financial capital.

But with plans in place to raise rates as part of a New York state budget deal, some financiers are exploring exits, emboldened by a pandemic that has illustrated how working on Wall Street no longer means working from Wall Street.

“I’m already looking for an apartment in Florida,” said a high-paying person at a top-tier bank who asked not to be identified because her employer didn’t yet know of her plans to move.

Others making more than $ 1 million are considering even bolder measures, such as moving not only themselves but also all of their investment firms out of town, arguing that higher taxes reduce their ability to pay staff.

A proposal making its way through the New York state legislature would see New York City’s top earners pay up to 15.73% in combined state and city taxes.

New York State income tax rates currently range from 4% to 8.82% and New York City tax rates range from 3.08% to 3.88%, leaving to the highest earnings paying closer to 12.7%.

Dubbed the “millionaires tax,” the proposal would add surcharges to people who earn more than $ 1 million a year and beat California towns to claim the highest combined tax rate in the country.

Some of those making $ 1 million or more, putting it in the higher tax bracket, are saying that the city’s cultural offerings, long a balm, no longer outweigh the benefits of lower-tax places like Florida. , Utah or Texas, especially given the success of telecommuting during the pandemic.

THE PASSAGE SEEMS LIKELY

The tax proposal, which seems likely to pass, is the culmination of a battle between progressive and moderate Democrats. Until recently, New York Governor Andrew Cuomo resisted the millionaire tax.

Political dynamics have rendered extensive lobbying efforts by wealthy companies and individuals virtually irrelevant.

Large financial companies, including Goldman Sachs Group Inc, Virtu Financial Inc and hedge fund Elliott Management, have already said they are moving some of their staff out of New York.

Big companies probably won’t leave their New York headquarters for tax reasons, but some of their staff and smaller firms, such as hedge funds that employ only dozens of people, could, the sources said. “This is real,” said one of the smaller fund managers. “This creates an overwhelming incentive to move.”

Last month, a group of business leaders, including those at JPMorgan Chase & Co, Citigroup Inc, and BlackRock Inc, took the unusual step of issuing a public letter warning that the wealthy would move out of New York if a major tax increase took place. . .

He said companies may have to relocate staff out of New York because their best talents don’t want to pay high taxes. Some companies have already initiated moves for corporate tax and spending purposes, people familiar with the moves said.

“When wealthy people don’t like something, they don’t protest, they just walk away,” said Geoffrey Weinstein, Cole Schotz’s tax attorney.

“The rich are being attacked and they are seeing if there is no way to cut 15%. They are looking for options. “