A kid looks back in a banner for Roblox, displayed to celebrate the organization’s IPO, on the front facade of the New York Stock Exchange (NYSE) in New York, March 10, 2021.
Brendan McDermid | Reuters
New York’s top business leaders are gearing up for a potential mass exodus as Gov. Andrew Cuomo and state lawmakers prepare to raise their taxes.
With the state budget set to increase the personal income tax on the wealthiest New Yorkers and trekking corporate taxation, some executives who fled town for Florida temporarily because of coronavirus pandemic lockdowns are thinking about permanent relocation, based on business leaders briefed on the topic.
Wealthy business leaders that have historically resisted moving at least some of their resources to Florida or alternative less-taxed states clarified to CNBC that they are now seriously reconsidering as working from home becomes the norm, allowing more flexibility.
Tracy Maitland, president of investment advisory company Advent Capital Management, stated that while he loves his home base, he’s not ruling out departing.
“It’s a consideration,” Maitland told CNBC in an interview Wednesday. “I love New York and I was born and raised in New York. I’m going to do whatever I can to try to steady the ship. If I can’t, then I’m going to have to make a decision,” he added.
Florida does not tax personal income. Miami Mayor Francis Suarez told CNBC that he has been connected with a few of New York’s biggest companies, including since specifics of their tax hikes were announced this past week.
“We have been,” Suarez said when asked whether he’s heard from New York-based industry executives lately. “I can’t give names but if you’re looking to know if we’re talking to the biggest firms in New York, we are.”
“Clearly, the toxic climate in New York has led businesses to look to Miami as an attractive place for long-term expansion and relocation,” Suarez said. He noted that he has obtained a”very receptive” response to his pitch to New York executives and pointed into transfers from Blackstone and Starwood Capital into Miami. Blackstone recently signed an office lease at Miami while Starwood moved its headquarters to the city.
JetBlue, that is presently headquartered in Long Island City, New York, is considering shifting some employees to Florida.
“We’ve hit a critical mass of interest and excitement in Miami and with these big players coming here, people are beginning to understand that this is very real,” Suarez said.
In the funding passed by state lawmakers in Albany and heading into Cuomo’s desk for signature, New York City’s executives will probably see joint state and local personal income tax rates which are higher than people on affluent California residents.
A spokesperson for Cuomo’s office didn’t return a request for comment prior to publication.
Within the more than $200 billion state funding, the best tax rate gets bumped to 9. 65% from 8. 82percent for single filers who make over $1 million. Those who make between $5 million and $25 million would be taxed at approximately 10.3% and for those earning more than $25 million the speed would be at 10.9%. Wealthy earners are expected to have hit with these new taxes within another tax season, together with the prices expiring in 2027.
As New York executives consider their future dwelling options, the wealthy round the country are facing the threat of the federal corporate tax rate moving up beneath President Joe Biden‘s government. The president has stated he wants to increase the corporate tax rate to 28% in order to pay for his infrastructure plan. Biden has said he’s ready to negotiate on the corporate rate. New York company leaders seeking tax relief via the removal of the cap on the state and local tax deduction (SALT) have lobbied Biden’s advisers and Sen. Majority Leader Chuck Schumer, D-N. Y.
Those who failed to be named in this story did so in order to talk openly about ongoing private conversations.
A Wall Street executive who’s had stints in investment firm Evercore and other similar offices told CNBC a few friends who reside in Palm Beach, Florida, are considering making it their permanent residence.
An executive with an investment company noted he is”thinking about it” when asked if he’d leave New York altogether.
A media executive who runs a huge public relations firm in New York explained that more than a dozen people he’s spoken to are seriously considering quitting the state permanently with taxes for the rich on the rise.
“Moving to Florida is an active and serious conversation with my peers,” this person said. “If my kids weren’t here I would move tomorrow.”
Other locales are also obtaining a look these days.
A corporate restructuring attorney said he is considering moving to Washington, D.C., believing he could save money on property taxes . Real estate taxes in Washington are drastically less than they’re in New York, according to some 2019 study by USA Today.
Kathryn Wylde, president and CEO of the Partnership for New York City, with hundreds of members that represent businesses across the town, told CNBC that company leaders are hearing from employees and possible recruits about the need to establish offices in nations outside of New York in order to allow them to avoid paying higher tax prices.
“What I’m hearing is that those nonresident taxpayers are now demanding from employers that they set up an operation where they can be domiciled so that they don’t have to pay some New York taxes,” Wylde told CNBC in an interview. Wylde’s group sent a letter to Cuomo and say Democratic leaders a month, encouraging them not to raise taxes. The letter did not appear to have much of an effect.
The partnership’s executive committee includes JPMorgan CEO Jamie Dimon, BlackRock CEO Larry Fink, Citigroup CEO Jane Fraser and Blackstone CEO Steve Schwarzman.
Wylde pointed to a conversation she had with an asset manager, which she declined to name, who advised her that a potential recruit refused to reside in New York City on account of the taxation raises and this executive is currently intending to open offices in Florida.
New York state law says that”if you are a nonresident, you are not liable for New York City personal income tax.”