The threat of “taxing millionaires” has some NY bankers, managers watching the exits

BOSTON (Reuters) – For decades, New York’s bankers and fund managers have accepted the city’s high tax rates as part of its business as the world’s largest financial capital.

But with plans to raise rates as part of a New York state budget deal, some financiers are exploring the exits, encouraged by a pandemic that illustrated how working on Wall Street can no longer mean working on Wall Street.

“I’m already looking for an apartment in Florida,” said a highly paid person at a top bank who asked not to be identified because his employer did not yet know his plans to move.

Others earning more than $ 1 million are considering even bolder steps, such as moving not only them but also their investment firms from the city, arguing that higher taxes will reduce their ability to pay in person. .

A proposal that makes its way through the state legislature in New York would make the best employees in New York pay up to 15.73% in combined state and city taxes.

New York State income tax rates currently range from 4% to 8.82%, and New York tax ranges from 3.08% to 3.88%, leaving top earnings paying closer to 12.7 %.

Called the “millionaire tax”, the proposal would add additional taxes for people earning more than $ 1 million a year and beat California localities to claim the country’s highest combined tax rate.

Some of those earning $ 1 million or more, placing them in the higher tax category, say the city’s cultural offerings, which have long been a staple, no longer outweigh the benefits of lower-tax locations, such as be it Florida, Utah or Texas, especially given the success of remote work during the pandemic.

THE PASSENGER SEEMS A PROBLEM

The tax proposal, which seems to be passing, is the culmination of a battle between progressive and moderate democrats. Until recently, New York Governor Andrew Cuomo resisted the millionaire tax.

Political dynamics have, however, made the extensive lobbying efforts of businesses and wealthy individuals questionable.

Large financial companies, including Goldman Sachs Group Inc., Virtu Financial Inc. and hedge fund Elliott Management, have already said they are moving staff from New York.

Large companies are unlikely to abandon their New York headquarters for tax reasons, but some of their employees and smaller firms, such as hedge funds that employ only dozens of people, could, sources said. “This is real,” said one of the smaller fund managers. “This creates an overwhelming incentive to get around.”

Last month, a group of business leaders, including JPMorgan Chase & Co., Citigroup Inc. and BlackRock Inc., took the unusual step of issuing a public letter warning that wealthy people will move out of New York if a major increase of taxes will be realized. .

The company said companies may have to move staff from New York because their top talent does not want to be taxed at high levels. Some companies have already initiated relocations for expenses and profit taxes, said people familiar with the relocations.

“When rich people don’t like something, they don’t protest, they just leave,” said Geoffrey Weinstein, a tax lawyer at Cole Schotz.

“The rich are under attack and see if there is a way to get rid of 15%. They are looking for options. ”