BOSTON (Reuters) – New York bankers and fund managers have been accepting high tax rates for decades as part of the world’s leading financial capital.
But with plans to raise rates as part of a New York state budget agreement, some financiers are investigating exits, encouraged by a pandemic illustrating how working on Wall Street may no longer mean working from Wall Street.
“I’m already looking for an apartment in Florida,” one high-paying person at a bank of the highest level asked not to be identified because his employer did not yet know about his plans to move.
Others who earn more than $ 1 million are considering taking even more daring steps, such as moving not only themselves but also their entire investment businesses out of the city, arguing that higher taxes reduce their ability to pay staff. .
A proposal passed by the New York state legislature would cause New York City’s earnings to pay up to 15.73% in joint state and city taxes.
New York State income tax rates currently range from 4% to 8.82% and New York City taxes range from 3.08% to 3.88%, bringing the highest earnings closer to 12.7%.
The proposal, called the ‘millionaires tax’, would add benefits to people earning more than $ 1 million a year, eliminating California residents to claim the country’s highest joint tax rate.
Some of those who earn $ 1 million or more and place it in the higher tax category say the city’s cultural offering, which has long been a slave, no longer outweighs the benefits of lower-tax places like Florida, Utah or Texas. , especially if the success of remote work during the pandemic.
PASSAGE seems likely
The tax proposal, which is likely to succeed, is the culmination of a battle between progressive and moderate Democrats. New York Governor Andrew Cuomo has until recently resisted the tax of millionaires.
The political dynamics have made the extensive lobbying efforts of businesses and wealthy individuals besides difficult.
Major financial firms, including Goldman Sachs Group Inc, Virtu Financial Inc and hedge fund Elliott Management, have already said they will be pulling staff from New York.
Large companies are unlikely to abandon their New York headquarters for tax reasons altogether, but some of their staff and smaller businesses, such as hedge funds that employ only dozens of people, may have said. “It really is,” said one of the smaller fund managers. “It creates an overwhelming incentive to move.”
Last month, a group of business leaders, including those of JPMorgan Chase & Co, Citigroup Inc and BlackRock Inc, took the unusual step of issuing a public letter warning that wealthy people would move out of New York as a major tax increase to its right come. .
It said businesses may have to pull staff from New York because their top talent does not want to be taxed at high levels. Some companies have already started moves for tax and corporate tax purposes, say people familiar with the moves.
“If affluent people do not like something, they do not protest, but just walk away,” said Geoffrey Weinstein, a tax lawyer at Cole Schotz.
‘The rich are attacked and see if there is no way to collect 15%. They are looking for options. ”
Reporting by Svea Herbst-Bayliss; Edited by Lauren Tara LaCapra and Howard Goller