New Report Estimates Costs of Wealthy Leaving New York

New York, NY — The departure of just a small percentage of New York City’s high-income earners could result in losses of hundreds of millions of dollars in revenue, a new Manhattan Institute (MI) report finds. The report—authored by public-policy researcher Donald J. Boyd and MI director of state and local policy Michael Hendrix, as part of MI’s New York City: Reborn initiative—estimates the associated losses from net out-migration by New York City residents earning $100,000 or more in aggregate income.

The report models three scenarios for the effects on the city’s tax base of a one-time net out-migration. The scenarios account for losses in personal income tax revenue, sales tax revenue, and unincorporated business tax (UBT) revenue. Its estimates include:

• If the city loses 1 percent of its high earners, it could lose an annual $220 million.
• If it loses 3 percent of its high earners, it could lose an annual $576 million.
• If it loses 5 percent of its high earners, it could lose an annual $933 million—roughly the amount the city spends on its public health department each year.

Past studies provide little clear precedent for constructing scenarios of an eroding tax base in New York City. This study’s results are therefore a first step toward understanding the possible consequences of net out-migration from New York City. These are not forecasts, but best-guess scenarios of what may happen if a one-time departure of wealthy New Yorkers meets or exceeds outflows of recent history without the comfort of additional revenues or renewed economic prosperity.

With remote work on the rise and changes to the federal tax structure amplifying the effects of New York City’s high taxes, the risk of out-migration is real. Surveys have shown that many people with the means to leave New York City are considering doing so. But the city’s public services would be highly sensitive to out-migration, suggesting that New York City’s leaders should prioritize policies that would preserve the city’s amenities, quality of life, and competitiveness.

Click here to read the full report.

About New York City: Reborn

New York City: Reborn is a Manhattan Institute project that encompasses research, journalism, and event programming. Through this initiative, the institute convenes business, civic, academic, and civil-society leaders from around the city with MI scholars to discuss issues key to the city’s recovery. Post-coronavirus, MI envisions a growing New York City with a thriving economy, healthy finances, accessible housing, effective infrastructure, flourishing education, safe streets, and increasing competitiveness. New York City: Reborn will help turn that vision into reality. Click here to learn more.