BOSTON (Reuters) – For decades, bankers and fund managers in New York have accepted the city’s high tax rates as part of working in the world’s premier financial capital.
But with plans to raise rates as part of a New York state budget agreement, some funders are investigating forays encouraged by a pandemic that has illustrated that working on Wall Street no longer means working from Wall Street.
“I’m already looking for an apartment in Florida,” said a well-paid person at a top bank who asked not to be identified because his employer was not yet aware of his plans to move.
Others earning more than $ 1 million are considering even bolder moves, such as moving not only themselves but their entire investment firms out of the city, arguing that higher taxes diminish their ability to pay staff.
A proposal pushing its way through the New York State legislature would cause New York City’s top earners to pay up to 15.73% in combined state and municipal taxes.
New York State income tax rates currently range from 4% to 8.82% and New York City tax ranges from 3.08% to 3.88%, bringing the highest income closer to 12.7%.
The proposal, also referred to as the “Millionaire Tax,” would add surcharges to people making more than $ 1 million a year and beat the places in California to claim the highest combined tax rate in the country.
Some of those making $ 1 million or more, putting them in the higher tax bracket, say the city’s cultural offering, which has long been an ointment, no longer outweighs the benefits of lower tax locations like Florida, Utah, or Texas , especially given the success of remote work during the pandemic.
PASSAGE SEEMS PROBABLE
The tax proposal, which is likely to be passed, is the culmination of a battle between progressive and moderate Democrats. Until recently, New York Governor Andrew Cuomo opposed the millionaire tax.
Political dynamics have left the extensive lobbying efforts of corporations and wealthy individuals virtually unquestioned.
Major financial firms, including Goldman Sachs Group Inc, Virtu Financial Inc and hedge fund Elliott Management, have already said they are moving staff out of New York.
Large companies are unlikely to leave their New York headquarters entirely for tax reasons, but some of their workforce and smaller businesses, such as hedge funds that employ only dozens of people, could, sources say. “This is real,” said one of the smaller fund managers. “This provides an overwhelming incentive to move.”
Last month, a group of business leaders, including those from JPMorgan Chase & Co, Citigroup Inc and BlackRock Inc, took the unusual step of sending a public letter saying that wealthy people would leave New York if a major tax hike came . .
It said companies may have to relocate New York staff because their top talent doesn’t want to be taxed at high levels. Some companies have already initiated relocations for expense and corporate tax purposes, said people familiar with the relocations.
“If rich people don’t like something, they don’t protest, they just leave,” said Geoffrey Weinstein, tax attorney at Cole Schotz.
“The rich are under attack and they see if there is no way to cut 15%. They look for options. “
Reporting by Svea Herbst-Bayliss; Edited by Lauren Tara LaCapra and Howard Goller