“It only takes a handful of successful people to leave to decimate the city’s tax base,” billionaire hedge fund manager Bill Ackman said to the Free Press on Wednesday. And he’s right.
A small but obscenely wealthy faction of New Yorkers are threatening to leave the city if Zohran Mamdani, the democratic socialist candidate for mayor, wins the race. Billionaire John Catsimatidis says he’ll go and take his supermarkets with him. Other rich people, like Neil Blumenthal and unnamed sources in finance and professional sports management, warn that others will leave too.
And the threat is real. Liberals often maintain that capitalism can co-exist with high taxes because any hit to the tax base by capital flight will inevitably be compensated for by the increase in revenue and economic growth, but while that happens on occasion, it’s far from an inevitability. In 2016, for example, hedge fund billionaire David Tepper caused a serious financial crisis for New Jersey when he left the state — and took billions in tax revenue with him. Politicians argued that it was the state’s high tax rate that chased him away. And capital flight has long plagued South and Central American countries; just last year, the persistent threat become so egregious in Nicaragua that president Daniel Ortega advanced a spate of legislation that (among other things) authorized the use of police force against corporate officers withholding financial information necessary to keep capital in the country.
So it’s not surprising to see the rich resort to the same tactics to keep Mamdani out of office. Still, there is a potential solution to this kind of problem: a state-level exit tax.
Exit taxes — taxes imposed on rich people who leave a given jurisdiction —…
Auteur: Carl Beijer
