New York’s Billionaire Landscape: A Fiscal Concern

New York is facing a pressing issue: it needs more billionaires. If it doesn’t, there’s a risk of falling behind other states and losing substantial tax revenue, according to a recent report that’s already influencing the mayoral race.

The Citizens’ Budget Committee, a nonpartisan organization, highlighted that, while the number of billionaires in New York nearly doubled from 2010 to 2022, other states have seen much greater growth. For instance, states like California, Florida, and Texas added billionaires at a significantly faster rate.

This discrepancy is costing the state real money. Had New York kept pace with others, the report suggests that both the state and city could have collected an extra $13 billion in taxes in 2022 alone. That lost revenue has a tangible impact, with an estimated $10.7 billion in state benefits slipping away last year.

Looking back at 2021, the missed revenue could have topped $15.3 billion, especially due to a surge in Wall Street profits during that time.

New York has fallen from being the second to the fourth state in terms of billionaire count, as families relocate to places like Florida and Texas. Even California, which has a high tax rate, continues to attract wealthy residents at a fast pace.

Florida saw its billionaire count quadruple between 2010 and 2022, while Texas and California both more than tripled their numbers. In contrast, New York’s growth has been limited to just doubling its billionaires.

Andrew Lane, the committee’s president, expressed that while there are discussions about affordability, generating more revenue is essential. “I think with more billionaires, we can boost our revenue even further,” he noted.

Billionaires play a vital role in New York’s financial ecosystem. Even though they represent only 1% of taxpayers, they account for a staggering 40% of the city’s personal income tax revenue and 44% of the state’s total. In 2022 alone, they contributed $34 billion to city and state funding, with $28 billion coming directly from residents.

However, the growth of billionaires in other states is concerning. Back in 2010, New York City had an equal number of billionaires as Florida; by 2022, Florida’s billionaire count had increased by 56%.

The report expressed worries that New York’s appeal is waning. High taxes, declining quality of life, rising crime, remote work trends, and increasing housing costs are diminishing the city’s attractiveness.

“To put it simply, New York’s allure isn’t compelling enough to keep up with the nationwide growth of billionaires,” the report concluded.

Adding to the concerns, New York has the highest tax rates imposed on its top earners, with those making $25 million facing a state and city income tax rate of 14.776%, compared to California’s 13.3%. Even individuals earning $2.2 million in New York pay more than their West Coast counterparts.

These findings come just nine weeks before voters from five districts head to the polls, amidst ongoing debates about affordability and inequality.

The Citizens’ Budget Committee’s argument for retaining wealthy New Yorkers echoes the sentiments of current Mayor Eric Adams and former Governor Andrew Cuomo. Adams remarked, “I don’t want to send the message that we don’t want billionaires here; their financial contributions are crucial.”

Cuomo, in a rebuttal to rival Zohran Mamdani’s proposal for a new 2% billionaire tax, described it as a “class struggle.” Mamdani, a Democratic candidate, advocates for using these funds for free childcare and transportation, expressing that “there shouldn’t be billionaires.”

While the watchdog’s release of this report isn’t overtly political, the parallels to the mayor’s arguments are apparent.

Not everyone is alarmed, however. Emily Eisner, chief economist at the Institute for Fiscal Policy, challenges the notion that high taxes drive the wealthy away. She argued that middle-class families, rather than billionaires, are the ones truly feeling the pressure as costs skyrocket in the city.

“The real question is about New York’s affordability for everyday people, not just the billionaire class,” Eisner concluded.