On Nov. 3, The New York Post ran the headline: "Nearly a million New Yorkers ready to flee NYC if Mamdani becomes mayor — possibly igniting largest exodus in history: poll."
The Post continued, citing a survey conducted by J.L. Partners, "Among high earners, 7% of those making over $250,000 a year said they would definitely flee." Another 2+ million said they'd consider leaving.
So, are rich NYC residents moving out? Not if real estate contracts are any indication.
The Non-Exodus
"Signed contracts for Manhattan homes costing $4 million or more rose to 176 in November, a 25% increase from October’s 141 deals, according to fresh data from brokerage Douglas Elliman and appraiser Miller Samuel. New signed contracts of more than $4 million increased at more than twice the rate of the overall market, the report noted," according to Fortune magazine on Dec. 4.
Indeed, rents and sale prices of high-end homes are rising in the city, says USA Today.
Meanwhile, The Guardian notes, " ... inventory in the 'luxury market' fell by 16% in October compared with the previous year, suggesting that, actually, more people are committing to staying in New York."
The Rich Depend On Not-Easily-Moved Networks
In 2023, Cornell University republished a Financial Times article that investigated the effects of higher taxes on wealthy people. "It’s worth noting that studies looking at income tax rates and economic growth tend to find that the effects are pretty negligible — and that many of the highest periods of growth in the developed world were also high tax periods," it said. "Indeed, there’s also plenty of research to suggest that lower tax rates just result in those at the top of the scale paying themselves more."
In his book, The Myth of Millionaire Tax Flight, sociologist Cristobal Young "uses groundbreaking analysis of IRS tax returns and billionaire data to show that wealthy Americans are far less mobile than commonly believed," says Cornell, where he works. "Despite their resources, millionaires tend to stay put — because their success is deeply tied to place, networks, and insider advantages."
The Guardian asked Quentin Parrinello, policy director at the EU Tax Observatory, why rich people so rarely move when taxes rise. "Because they have cultural, family or economic ties to the area," he replied. "Sometimes it’s assets you cannot physically move, sometimes it’s a network of contacts that create business opportunities, sometimes it’s the attraction for the cultural offer in the area. This is particularly the case for a big metropolis like NYC."
In New York's case, it may also be that it's not as easy to move as some millionaires and billionaires think. Last week, The New York Times reported on the obstacles New Yorkers face if they wish to migrate to another state.
"According to tax lawyers and financial planners who advise the city’s upper echelon, many wealthy New Yorkers who want to avoid taxes by moving are often unwilling to go to the lengths required to pass auditors’ scrutiny," said The Times.
But it's not just the financial upheaval. The Times continues, "Their lives are deeply woven into the city, where they have networks of family, friends, medical care and social activities, and those ties would have to be significantly curtailed or severed entirely. Moving would uproot not just their lives but also those of their family members, including children, who would have to be enrolled in new schools.
So, Who Does Move to Avoid Taxes?
Of course, some people do move from higher to lower tax environments and live with the upheaval. But they tend to be those in the 99% rather than the 1%.
They might be feeling the pinch and are sensitive to every dollar they spend — or see deducted from their pay stubs. They might be retirees on fixed incomes who find that their tax burdens are affecting their lifestyles. But they tend to be driven by financial need, while truly rich folks can afford to live wherever they like.
