Ever since Zohran Mamdani began his ascent to mayoral office, journalists and commentators have been debating the effects of his proposed millionaire tax increase. Skeptics worry that the tax will cause large numbers of millionaires to leave New York. Governor Kathy Hochul weighed in back in June, telling one New York news station: “I don’t want to lose any more people to Palm Beach.”
Wealthy out-migration is a concern that demands real engagement. There are three specific concerns that skeptics may have in mind. First, the tax increase might cause so many people to leave that it would paradoxically cause total tax revenue to fall. Second, even if the tax hike does raise revenue, out-migration might mean that it raises substantially less than the Mamdani administration anticipates. And third, out-migration might have other adverse effects on the economy: if millionaires are the ones who “create jobs,” perhaps their departure will have adverse effects on those who remain.
Academic economists have studied all three claims. Unfortunately, the public debate so far has engaged only minimally with existing research. What evidence do we actually have about how millionaires respond to taxes? And what does this evidence mean for Mamdani’s proposal?
The evidence I’ll present below gives some approximate but useful answers that can ground the discussion. If skeptics are truly only worried about the first two concerns, then the academic literature is essentially unanimous: out-migration almost certainly won’t be large enough to fully offset the revenue gains from higher taxes. Under a best guess, out-migration would modestly lower the administration’s revenue forecast: from about $4 billion in increased tax revenue to about $3.95 billion, with a standard estimate of out-migration.
And finally, believing that the tax increase is too high because of the benefits millionaires provide to others requires adopting somewhat fringe views on how strong the…
Auteur: Martin Bernstein
