New York millionaire flight fears do not match IRS data
New IRS data and a Fiscal Policy Institute analysis suggest millionaires are not abandoning high-tax states like New York after rate hikes. New York's millionaire count rose after 2021 tax increases, and analysts say top earners are simply not sensitive enough to current rates to leave in large numbers.
Key Takeaways
- New York's millionaire filer count rose after the 2021 tax hike on incomes over $1 million.
- The Fiscal Policy Institute says progressive-tax states still hold the highest millionaire concentrations.
- Critics note New York's share of U.S. millionaires has still slipped versus faster-growing states.
- Middle- and upper-middle earners feel the squeeze more than the ultra-wealthy, FPI's director said.
Did New York really lose millionaires after raising taxes?
According to a Fortune report on Fiscal Policy Institute analysis of IRS Statistics of Income data, New York's millionaire population kept growing even after the state raised rates on incomes over $1 million in 2021.
State figures cited by FPI show million-dollar earners climbing from 57,126 in 2016 to 68,068 in 2019, then jumping 21% to 84,366 in 2021. That same year, the number of millionaires who left New York fell to 1,453 from nearly 2,000 the year before. The state's millionaire share rose again in 2023, the latest year available.
Emily Eisner, FPI's executive director, told Fortune that millionaire households "simply just aren't that sensitive to the tax rates in the state" because "the taxes aren't really high enough for them to be sensitive to them." For more wealth coverage, see our Net Worth & Wealth hub.
Are high-tax states still millionaire friendly?
FPI found that states with the most progressive tax systems—California, Connecticut, Massachusetts, New Jersey, New York, and Washington, D.C.—have the highest concentration of millionaires per filer, and those counts have grown since 2010.
It was not only income tax. After New York expanded its mansion tax on New York City home sales over $1 million in 2019, both the raw millionaire count and the state's share of the nation's millionaires kept climbing, Fortune reported.
High-profile exit threats also cooled. After New York City floated a pied-à-terre tax this year, Citadel initially hinted it might scrap a planned $6 billion Park Avenue tower; by August it confirmed it was staying.
Why do critics still warn about New York's tax climate?
A City Journal critique argues FPI conflates existing wealth concentration with proof that higher rates cause no harm. It notes New York's share of the nation's income millionaires fell from 12.7% in 2010 to about 9% from 2020 to 2023, even as the local count rose.
Between 2010 and 2023, City Journal says New York's millionaire concentration nearly doubled—from 3.86 to 7.32 per 1,000 filers—while Florida's more than tripled, from 2.02 to 6.5. Florida's 2023 concentration also topped California and New Jersey in that one-year snapshot.
Fortune noted New York's national share slipped as other states added millionaires faster, and Eisner said the real squeeze often hits households earning $100,000 to $500,000 in costly New York City—not the ultra-rich.