But new IRS data shows something different. According to a Fiscal Policy Institute analysis of IRS Statistics of Income data, the states with the most progressive tax systems still have the highest concentration of millionaires.
These states — California, Connecticut, Massachusetts, New Jersey and New York, as well as Washington, D.C. — have also seen a growth in their number of millionaires since 2020.
“Not every millionaire leaves, or even most millionaires leave, when you raise top marginal rates,” Adam N. Michel, director of tax policy studies at the Cato Institute, told Fortune. “There are some wealthy people that leave. They tend to be the ones that are least connected in the state — after you sell your business and you’re retired, or you’re a superstar scientist or an athlete, someone that has a lot of options.”
New York’s wealth taxes
New York stands as a prime example that millionaires are staying put even if taxes are going up. In 2023, the most recent year of data, New York’s millionaire share rose even after the state raised the tax rate on incomes over $1 million.
According to data from the Fiscal Policy Institute, in 2016 there were 57,126 people in the state who earned $1 million per year. By 2019, that number grew to 68,068. In 2021, the state raised taxes on those earners, but the number of millionaires still jumped 21% to 84,366. Meanwhile, the number of millionaires who left the state fell.
The wealthy in New York aren’t just being hit by higher income taxes. In 2019, the state expanded its “mansion tax,” which applies to home sales in New York City that are over $1 million. That still didn’t turn millionaires away from the city.
And of course, the latest levy targeting the state’s wealthy individuals is the pied-à-terre tax in New York City, which is imposed on non-primary, second homes valued at $1 million or more. The tax sparked uproar from the ultra wealthy, including hedge fund mogul and Citadel CEO Ken Griffin, whose $240 million apartment in Manhattan was called out by New York City Mayor Zohran Mamdani.
In response, Griffin threatened to pull Citadel’s plan for a $6 billion office tower in Manhattan and relocate employees to Miami. His partner on the project, Steven Roth, went so far as to say the term “tax the rich” is “just as hateful as some disgusting racial slurs” when used with anger by politicians, The New York Times reported.
But for all the talk, Citadel eventually decided to stay, confirming it would continue with its plans for the Manhattan tower.
