Public debate centers on whether higher taxes on high-income earners and profitable corporations would drive wealthy residents to leave New York City or New York State. The stakes include funding for universal childcare, free buses, and large-scale affordable housing construction. The key economic issue is elasticity: how much outmigration occurs when the top marginal tax rate rises. Evidence indicates that outmigration tradeoffs from higher income taxes on high earners are minimal. Tax increases on high earners in New York and Massachusetts produced large revenue gains. Research across all fifty states estimated an elasticity around 0.1, meaning a 1 percentage point increase in the top marginal tax rate leads to about a 0.1 percent increase in outmigration flows.
"When legislators propose tax increases for high-income earners and profitable corporations, pundits and politicians sound the alarm that New York City's wealthy will leave. Debate on this issue reached a fever pitch with the election of Zohran Mamdani to the mayor's office. Without raising taxes, policies that would substantially improve the lives of working- and middle-class families—universal childcare, free buses, and two hundred thousand units of new affordable housing construction—will be jeopardized."
"The fate of such programs turns on the question of how New York's taxes shape the City and State economy. The case of high-earner tax migration poses the following economic questions: Will increased tax burdens cause high earners to leave New York City or New York State? If so, will they move in such high numbers as to decrease tax revenues? If not, are there other negative economic consequences for increasing top tax rates and potentially losing some number of high earners?"
"Recent evidence suggests the out-migration tradeoffs of raising income taxes on high earners are minimal. Such taxes may cause a very small number of millionaires to move, without undercutting public revenue generating potential. Recent examples of tax increases on high earners in both New York and Massachusetts demonstrate large revenue gains."
"The underlying economic question concerns elasticity—for every 1 percent increase in the top marginal tax rate, what percentage of high earners will leave the jurisdiction subject to tax increase? In 2016, Cristobal Young, Charles Varner, Ithai Z. Lurie, and Richard Prisinzano analyzed tax increases on top earners in all fifty states and found an elasticity of approximately 0.1. That is, a 1 percentage point increase in the top marginal tax rate results in a 0.1 percent increase in outmigration flows."
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