One of the many fears raised by Zohran Mamdani’s Democratic primary victory is whether as mayor he would scare off New York City’s high earners.
The question comes up whenever New York politicians propose taxing the rich, as Mamdani has. Real estate people, especially in the luxury residential and Class A office markets, are very sensitive to this issue. So are budget hawks, because high earners account for so much tax revenue.
State lawmakers are highly unlikely to grant Mamdani’s request for a tax increase, but let’s set that aside and examine whether tax increases have sent New York billionaires packing.
Here is a chart that DataPulse put together from the Forbes list. The headline highlights Florida’s gain, but note that all four states gained many billionaires, and the Sunshine State trails New York by about the same margin today as in 2001:
Much attention has been paid to the idea that billionaires can easily relocate to tax havens when their own states raise taxes on the wealthy, as both New York and California have done.
Rochester billionaire Tom Golisano cited New York’s “millionaires’ tax” when he moved to Florida in 2009. That happens to be the same year he began dating Floridian Monica Seles, the tennis legend, whom he married in 2014.
In another high-profile relocation, Elon Musk moved himself and two of his companies from California to Texas, which, like Florida, has no state income tax. He cited California’s new transgender law and other progressive policies.
Whether the exodus of the rich is real or exaggerated, it’s clear from the chart above that a larger phenomenon has been happening: The billionaire count has surged in both the high-tax and the zero-tax states. It went up every year this century except two (after the financial crisis and the pandemic).
To be sure, taxes affect where people live. If New York City and state confiscated 100 percent of taxpayers’ income, most would leave. If Florida and Texas had state income taxes, fewer billionaires would reside there. If New York and California had lower taxes, they would probably have even more billionaires.
But the chart shows that taxes have not stopped the high-tax states from minting billionaires. It’s safe to say that a chart of all high-net-worth individuals would show similar growth.
This is why luxury developers such as Miki Naftali and Gary Barnett continue to invest in New York City — and why luxury brokers should not panic. Even if Mamdani could persuade state lawmakers to pass a tax hike, which is unlikely, it wouldn’t shut down New York’s billionaire-producing factory.
Real estate has other concerns about Mamdani. Among them:
- Would his socialism stifle development, strangle rent-stabilized buildings and shift city funding to nonprofits?
- Would his “Department of Community Safety” be ineffective at whatever tasks it takes away from the NYPD?
- Would he only punish “bad landlords” or also owners who can’t maintain their buildings because of government policies?
- Could he capably run the massive city bureaucracy?
Those questions loom larger than Mamdani’s proposed tax hikes and the free child care and buses they would purportedly fund.
New York already has a three-tiered millionaires’ tax, with rates of 9.65 percent, 10.3 percent and 10.9 percent for income over $1.08 million, $5 million and $25 million, respectively. Passed as temporary measures, they are routinely extended by state lawmakers. New York also passed two mansion taxes, first for $1 million sales and then for $2 million sales.
In Gov. Kathy Hochul’s view, taxes are now high enough. She says Mamdani will not change her mind.
But even if he did, if history is any guide, the luxury market would keep gaining customers.
Read more
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