The warnings were stark. If Zohran Mamdani were to win the New York City mayoral election, his plans to raise taxes – slightly – on the city’s wealthiest residents would cause millionaires to bolt en masse, decamping to lower-tax states such as Florida and Texas.
The New York Post, a conservative tabloid owned by Rupert Murdoch, told readers on an almost daily basis through October that New York would effectively become a ghost town under Mamdani’s mayoralty, a propaganda campaign that concluded the day before the election with the bombastic claim that “nearly a million” people were planning to “flee”.
But a month after Mamdani’s historic win, there is no evidence that rich people are leaving the Big Apple. In fact, they seem to be committing to staying in New York.
Signed contracts on Manhattan homes costing more than $4m increased in November compared with October, Fortune magazine reported, with the most expensive homes outperforming the overall market. And inventory in the “luxury market” fell by 16% in October compared with the previous year, suggesting that, actually, more people are committing to staying in New York.
So despite the fearmongering about rich people leaving, and taking the money they contribute to the city in taxes with them, it isn’t happening yet. Experts say it is unlikely to start.
“If we just look at migration rates of high-income people, the rates are very low. Rich people are not the folks who are, you know, pulling up camp and moving to a different part of the country. That’s just not who’s doing that,” said Cristobal Young, an associate professor in the department of sociology at Cornell University and author of The Myth of Millionaire Tax Flight.
This is partly because rich people are more likely to have the kind of attachments that make it difficult to uproot. The wealthiest Americans are significantly more likely to be married than middle-income earners, which data shows makes them less likely to move city, Young said.
“It’s one of these things that’s part of the spoils of economic success in life,” he said. “What we see is that high-income earners have a lot of things that we can easily think of as sort of normal attachments to place. When they’re married, their migration rates are a lot lower when they have kids, their migration rates are a lot lower.”
Young and others have analyzed the introduction of taxes similar to those proposed by Mamdani in New Jersey, California, Connecticut and Massachusetts, and found little evidence that those policies led to a mass exodus.
“It’s totally possible that a handful of people will move away. There’s going to be some people who were close to the margins [of leaving] saying: ‘You know what, New York isn’t working for me anyway, this isn’t the right city for me.’ And if the tax rate goes up by a couple of points, you know that’ll be for them the last straw. But what you need to think about is the fact that 98% of high-income earners are going to stay in the city, and they’ll be paying that new tax rate, and they’ll be contributing more revenues.”
Quentin Parrinello, policy director at the the EU Tax Observatory, said studies in Scandinavia and France also shows that “mobility of high-net-worth individuals does exist, but it is extremely limited”.
So why do people tend to stay in the end?
“Because they have cultural, family or economic ties to the area. Sometimes it’s assets you cannot physically move, sometimes it’s a network of contacts that create business opportunities, sometimes it’s the attraction for the cultural offer in the area. This is particularly the case for a big metropolis like NYC,” Parrinello said.
“And the complexities of moving away from these opportunities ultimately appear bigger than what you will pay in tax – particularly when the proposed tax rise is somewhat modest at the aggregate level of taxes paid.”
