New York’s richest search for exits as the state prepares a hefty tax hike
New York’s top business leaders prepare for a possible mass exodus as Governor Andrew Cuomo and lawmakers prepare to raise their taxes.
Given the state budget aimed to raise income taxes for New York’s wealthiest and raise corporate taxes, some executives who have temporarily fled the city to Florida due to coronavirus pandemic lockdowns are considering permanent relocation, according to the business leaders briefed on this matter.
Wealthy business leaders who have historically refused to move at least some of their resources to Florida or other less taxed states told CNBC that they are now seriously reconsidering that working from home becomes the norm and allows for more flexibility .
Tracy Maitland, president of investment advisory firm Advent Capital Management, said that while he still loves his home base, he doesn’t rule out a departure.
“It’s a consideration,” Maitland told CNBC in an interview on Wednesday. “I love New York and I was born and raised in New York. I will do everything I can to stabilize the ship. If I can’t, I have to make a decision.” he added.
Florida does not tax personal income. Miami Mayor Francis Suarez told CNBC that he has been in contact with some of New York’s largest corporations, including since details of the tax hike were announced earlier this week.
“We did,” Suarez said when asked if he’d heard from New York-based business executives in the past few days. “I can’t name names, but if you want to know if we’re talking to any of the biggest companies in New York, we are.”
“New York’s toxic climate has clearly led companies to see Miami as an attractive place for long-term expansion and relocation,” said Suarez. He noted that he had received a “very receptive” response to his pitch with New York executives, citing Blackstone and Starwood Capital relocations to Miami. Blackstone recently signed an office lease in Miami while Starwood moved its headquarters to the city.
JetBlue, headquartered in Long Island City, New York, intends to relocate some employees to Florida.
“We’ve got a critical mass of interest and excitement in Miami and with these big players coming here, people are starting to understand that this is very real,” said Suarez.
In the budget passed by Albany lawmakers and sent to Cuomo’s desk for signature, New York executives would likely see combined local and state income tax rates higher than those for wealthy California residents.
A spokesman for Cuomo’s office did not return a request for comment prior to release.
Within the more than $ 200 billion state budget, the top tax rate will be raised from 8.82% for single applicants earning more than $ 1 million to 9.65%. Those earning between $ 5 million and $ 25 million would be taxed around 10.3%, and those making more than $ 25 million would be taxed at 10.9%. Wealthy earners are expected to be hit by these new taxes in the next tax season. The tax rates expire in 2027.
As New York executives ponder their future life options, the rich across the country are at risk of federal corporate tax rates rising under President Joe Biden’s administration. The president has said he will raise the corporate tax rate to 28% to pay for his infrastructure plan. Biden has said he is ready to negotiate the corporate tariff. New York business leaders seeking tax breaks through the Abolition of the State and Local Tax Withholding (SALT) cap have Biden’s adviser and Majority Leader, Sen. Chuck Schumer, DN.Y.
Those who refused to appear in this story did so to speak freely about ongoing private conversations.
A Wall Street executive who worked at investment firm Evercore and other similar bureaus told CNBC that some friends who already reside in Palm Beach, Florida are considering making it their permanent home.
An executive at an investment firm noted he was “thinking about it” when asked if he would be leaving New York altogether.
A media manager who runs a massive public relations firm in New York stated that more than a dozen people he spoke to are seriously considering leaving the state permanently with taxes rising for the rich.
“Moving to Florida is an active and serious conversation with my co-workers,” said that person. “If my children weren’t here, I would move tomorrow.”
Nowadays other places are also looking.
A corporate restructuring attorney said he was considering moving to Washington DC because he believed he could save money on property taxes there. Washington property taxes are drastically lower than New York’s, according to a 2019 USA Today study.
Kathryn Wylde, president and CEO of the New York City partnership, which has hundreds of members representing businesses across the city, told CNBC that corporate executives and potential recruits are asking about the need to set up offices in states outside of New York listen so they don’t have to pay higher tax rates.
“What I hear is these non-resident taxpayers are now requiring employers to set up an office to be resident so they don’t have to pay New York taxes,” Wylde told CNBC in an interview. Wylde’s group sent a letter to Cuomo and the Democratic leaders last month encouraging them not to collect taxes. The letter didn’t seem to have much impact.
The partnership’s executive committee consists of JPMorgan CEO Jamie Dimon, BlackRock CEO Larry Fink, Citigroup CEO Jane Fraser and Blackstone CEO Steve Schwarzman.
Wylde pointed to a conversation with an asset manager she declined to name who told her that a potential recruit has refused to live in New York City due to tax increases and that executive is now planning to open offices in Florida .
New York state law states that “if you are a non-resident, you will not be liable for New York City personal income tax”.