Wealthy New Yorkers Can't Afford to Move

People leave the city for many reasons. But the richest don't stray far.

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dibrova/Shutterstock.com

Living in New York City is expensive. Taxes, for one, aren't cheap. A NYC worker earning $500,000 per year faces state and city income taxes totaling about $53,000, before any deductions. Relocating to Virginia would nearly halve that same worker’s tax burden to around $28,000. And If they moved to a state like Florida, where the individual income tax has been abolished, the tax bill would be eliminated entirely.

But according to a new report issued by New York City's Independent Budget Office, the Big Apple’s richest residents, when they do move away from the city, are staying in the tri-state area rather than relocating to predominately southern states with more favorable tax policies. Adding up the U.S. Census Bureau data used by the study's authors (below), 76 percent of New York City households earning $500,000 or more who relocated beyond the city limits between 2010 and 2012 moved to either New Jersey, Connecticut, or the New York suburbs, three states with relatively high income tax rates. 

(New York City Independent Budget Office/Julie Anna M. Golebiewski)

Meanwhile, over that same period, New York City households earning less than $500,000 were far less likely to relocate within the tri-state area. Of those who moved, only 36 percent found new homes in Connecticut, New Jersey, or areas of New York outside the city. This income group represents a much larger population, and so is more likely to reflect diverse areas of relocation. But the figure is still a stark contrast to the 76 percent of ultra-wealthy NYC households that relocated within the area.

The reasoning seems pretty clear: lower-wage workers are more likely to leave for more affordable states than high-wage earners who can afford living in expensive areas surrounding the city. The additional takeaway here, though, is that those higher-wage workers really can't afford to stray far from NYC, anyway. 

“I think [the report] shows that wealthy New Yorkers aren’t just making decisions about New York based on taxes,” says Jonathan Bowles, executive director of the Center for an Urban Future, a New York-based think tank. Indeed, as the report shows, even if taxes and operational costs are appealing elsewhere, wealthy New York business execs simply can’t afford to move too far if they want to stay wealthy and stay competitive.

“Whether it’s finance or tech—the talent within these industries wants to be here in New York,” Bowles says. “So, for a lot of wealthy New Yorkers that own their own businesses or tech firms, they want to be here because the city has so much to offer in terms of talent. They really need to be here.”

Unfortunately, the report doesn't drill down very far to explore relocation patterns for lower-income New Yorkers. Grouping together ex-NYC households whose income levels exceed $500,000 is one thing; everyone in that category is pretty financially secure. But a wide range of low-, middle-, and high-income households fall under the broad category of “mover households” earning less than $500,000.

The report’s author, Julie Anna Golebiewski, says she "chose to highlight high-income households separately in this analysis" to understand in particular where that group moves. "It is possible to break down the less-than $500,000 further, though,” she acknowledged.

The results leave Bowles wanting a fuller picture of New York Citys's emigration patterns. “I’ve suspected for some time now, increasingly it’s the working poor that are leaving New York," he says. "And it’s hard to understand that with this data. If you’re making the minimum wage in retail or manufacturing, your income is going to go much farther in Charlotte or Houston than it will in New York." 

Top image:  dibrova / Shutterstock.com

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