Who cares if New York City’s high marginal income-tax rates make this city’s residents among the most heavily taxed in America? It really doesn’t matter.
That’s the dubious spin being put on a study released this week by the city’s Independent Budget Office.
In 2012, it found, just 1.8 percent of high-income earners (defined as those with real incomes of more than $500,000) moved out of New York City. And taxes had nothing to do with it.
How do we know? Well, the report found that high-income earners were “no more or less likely to move than other households.”
Moreover, of those who did move, 42 percent settled elsewhere in the Empire State, 22 percent went to New Jersey and 12 percent moved to Connecticut.
Leave aside that in a city where the rich account for a highly disproportionate share of income taxes, losing 1.8 percent of your wealthy taxpayers each year is a serious drain. The claim that taxes can’t be a factor because most are moving to high-tax places nearby is absurd.
Over at the Empire Center, EJ McMahon blows a hole in this argument. Because the city imposes its own income taxes on top of the state’s, any wealthy Gothamite can get an instant tax cut “simply by stepping across the border in any direction.”
A New York City couple earning $2 million, he notes, would save $70,000 each year in income taxes simply by moving to a New York suburb — and $100,000 if they cross the Hudson to Jersey.
In short, all this study proves is that only a city with tax rates as sky high as New York’s could transform Jersey into an alluring tax haven.