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The hollowing out of New York state continues largely unabated despite years of warnings about the state's loss of population.
While the state pays lip service to doing more to make New York a less expensive state in which to live, people are still leaving in droves. The net outflow of New Yorkers to other states has topped the 1 million mark since 2020, E.J. McMahon, an adjunct fellow at the Manhattan Institute, wrote earlier this year for City Journal. While the state has seen more migrants come to New York than estimated following the COVID-19 pandemic, even that positive population trend has waned in recent years. McMahon said the past two years have brought what the Census Bureau calls a "historic decline in net international migration."
"With New Yorkers continuing to leave the state at a steady pace, a modest two-year rebound in the Empire State's population came to a halt--with all signs pointing to renewed decline in the second half of this decade," McMahon wrote.
What's interesting to us is how many of those who are leaving the state are classified as high-wage earners – the taxpayers who help balance New York state's budget every year with their large personal income tax payments.
Outmigration of high-income earners ($500,000 or more) was slightly more than -1% from 2015 through 2019 before skyrocketing to -4.52% in 2020. The rate has slowed in the years since to -2.75% in 2021, -1.37% in 2022, and then less than -1% in 2023 and 2024. While the rate of outmigration for high earners is slowing, it is still the highest level of outmigration in the state by income level.
The loss of high-wage earners is typically painted as a New York City problem. But the Manhattan Institute also noted recently that as of 2023, the 68,570 New York households with incomes above $1 million represented .7% of all resident personal income tax filers, and earned 26% of adjusted gross income in the state while generating 41% of the total income taxes paid by state residents, according to the state Department of Taxation and Finance. The percentage of millionaires in New York City for the same time period is a little higher than throughout the state and represents a greater percentage of the city's gross income, but actually represents a lower percentage of the city's total income taxes paid.
That means the loss of high-wage earners is a bigger problem for the state's budget than it is for New York City's budget, as hard as that is to believe. New York's share of the population of taxpayers earning over $1 million has also decreased over time, while Florida's has increased.
Tax the rich is a popular and catchy slogan. But if the state begins losing high-wage earners at rates closer 2020 through 2022 again, someone will have to pay the piper for New York state's spending largesse. And the rich may not be here to pick up the tab.