Are Super-Rich Leaving New York Over Taxes?

July 16, 2018 - 3:42 pm

NEW YORK (WCBS 880) -- There are data to back up the notion that the super-rich of New York are heading for the exits because of changes in tax law.

Greg David of Crain’s told WCBS 880’s Paul Murnane that people who have relationships with the ultra-rich in New York keep saying they know people who are moving to Florida.

“The head of a major city nonprofit told me that one of their trustees just relocated to Palm Beach. Interestingly, it’s always Palm Beach; it’s never anywhere else in Florida. And I checked with three other people who care about this issue of whether people are leaving New York as much as I do, and all of them told me they too have heard anecdotes of people who are relocating,” he said.

The reason, David said, is the Republican tax bill that limited deductions for state and local taxes to $10,000.

“This affects the ultra-wealthy the most,” David said. “So not only do they pay much higher taxes in New York for state and local government than they would in, say, Florida, which has no income tax, but their federal tax bill will now be so much higher if they live in New York than if they live in Florida.”

Many candidates are now running for office on the contention that people are moving south. But as to whether it’s actually happening en masse, that’s not so clear.

“They are. Now the question is, is it true? There’s reason to be suspicious – I just wonder why everyone’s moving to Palm Beach. The problem is we don’t know, and we’re not going to know for a while. It’s not until the state Department of Tax and Finance looks at income tax returns and actually matches up the residence that people have,” David said. “Now, you could think that next spring, we’ll know, but the trouble is that the rich don’t file their tax returns on time. They get extensions because they’re so complicated.”

It may actually take until 2020 to determine whether there is really flight from New York, David said.

Meanwhile, Gov. Andrew Cuomo insists he is going to do something to help New York state residents because of the Republican tax plan, and he has two major ideas.

But both ideas have been met with roadblocks or lukewarm responses, David said.

“The first one is that we’ll create this charitable trust, and instead of paying your state income tax, you’ll make a charitable contribution for the same amount, which will be deductible. The only trouble is the IRS says, ‘It’s illegal and we’re going to fight it,’” David said. “The other idea is to replace the income tax with a payroll tax. Virtually no companies are interested in making the switch that they would have to do.”

As to where things now stand, David said there will likely only be anecdotal evidence of people leaving New York for the next couple of years.