Holy smokes, y’all
Week 10 of the Mamdani Administration was a home run, slam dunk, [insert your favorite sports metaphor here]. Here are some of the highlights:
Universal Childcare: The city announced 1,000 new 3-K seats for the 2026/2027 school year
$30 Minimum Wage: Council Member Sandra Nurse introduced a bill to phase the minimum wage from $17 to $30/hour by 2030
Free Buses: The state legislature proposed to bring back the fare-free bus pilot program Mamdani launched when he was a wee Assembly lad.
And of course, the biggest news of all…
Deep Dive: Will the rich actually leave?
The state Senate and Assembly released budget proposals this week, and both houses included tax increases for big businesses and wealthy individuals.
It’s fantastic news! So of course cue the reddit discussions, podcast chats, and statements from Governor Hochul fretting about all of the rich people fleeing.
I decided to find out once and for all: do higher taxes actually make rich people flee?
I went into this expecting a complicated, murky, "well, it depends" kind of answer. But research shows the answer is astonishingly simple:
The millionaires are staying put.
In 2021, New York state raised taxes on high earners, and the Fiscal Policy Institute found that the wealthiest households actually moved out at a lower rate than every other income group. Plus, the city's millionaire population grew by 10%.
Massachusetts voters approved a 4% additional tax on million-dollar incomes in 2022. The Institute for Policy Studies found that the state’s millionaire population grew by almost 40% (!!)
After the 2017 Tax Cuts, economists predicted a million millionaires would flee high-tax states. A Cornell sociologist Cristobal Young studied millionaire tax returns for two years before and after…and found no increase in migration whatsoever.
Now, the counterpoints:
New Jersey raised its top income tax rate by 2.6% in 2004. Some millionaires did leave…but that lost income represented 0.4% of the new revenue raised.
Two economists found that yes, wealthy Californians didn't move after a tax increase, but they did move their money in order to avoid the tax increase. Still, a household earning $4 million still ended up paying on average $70,000 more in taxes.
The most compelling evidence showing rich people flee higher taxes is from when states introduced income taxes for the very first time. New York began taxing residents in 1919, so I think we are in the clear. 2
Even the president of the Citizens Budget Commission (which opposes the millionaire tax) acknowledged: "No one should believe that suddenly people and businesses will leave in droves tomorrow if taxes are raised." His concern is about long-term competitiveness for businesses, not an immediate exodus.
In terms of "long-term competitiveness,” there's one fact almost every take on this debate buries. New York taxes corporations based on where their customers are, not where their offices are. Since a 2015 reform, the state uses single-sales-factor apportionment — meaning Goldman Sachs can build a $500 million campus in Dallas (and it is!), but if it's still earning money from New York clients, it still owes New York taxes. You can move your headquarters. You cannot move your client list.
The real concern isn't an exodus. It's slower future growth, i.e., fewer new businesses choosing to set up shop in the city. That's a legitimate worry. But also, Wall Street isn't relocating to Wisconsin. Broadway isn't moving to Boston. Many companies rely on NYC’s network effects for talent, growth, and branding. So the ones that need to be here will continue to pay for the privilege.
What happens next
The governor's budget notably didn't include these tax increases, so she, the Senate majority leader, and the Assembly speaker 1 now have to duke it out. Their final budget is due April 1.
Why this matters
Mamdani's landmark promises — free buses, universal childcare, 200,000 housing units — depend on Albany providing more tax revenue. So fingers crossed!
Till next time, Niki
PS The deep dive above was inspired by reader request. Have a question you want answered? Reply and I'll slot your topic in for April ;)
Was this interesting?
The best way to support this newsletter is simple: forward it to a fellow voter. You probably already thought of a friend who will want to click the button below:
1 plus staff, so many unnamed staff members who do the thankless work!!
2 in full transparency, I’m leaving out one critical counterargument. Some economists did find that millionaire taxes do lead to significant migration among a group that does not get enough attention: “The paper’s most important finding is that major state income tax increases (meaning income tax rate increases of 1 percentage point and above) significantly reduce participation in golf tournaments in the affected states, particularly among the highest-earning golfers.”