Millionaires row away
Tax plan has rich NYers eyeing Sunshine State
The Big Apple’s millionaires would have a tantalizing new incentive to flee the tax-happy state for Florida if President Trump’s tax plan becomes law, according to a new study.
The report, from the Empire Center, an Albany-based think tank and fiscal watchdog, said the elimination of deductions for state and local taxes in the plan would hit New York and other high-tax states the hardest.
Florida, on the other hand, has no income tax.
“The taxpayers who really take it on the chin will be those in the same high-income brackets that are now subject to New York’s millionaire tax: single filers with incomes starting at $1 million and married-joint filers earning at least $2 million,” said the report, written by E.J. McMahon, the center’s research director.
McMahon said for a top bracket, multimillion-dollar earner, the net tax difference between New York City and Florida is now 7.7 percent of income.
If deductions for state and local taxes were eliminated, Gotham’s gilded would pay 12.7 percent more than Floridians. “That’s likely to induce many more affected New Yorkers to reconsider their residency status,” he said.
McMahon said there was no way to predict what tax plan will eventually emerge from Congress, but if Trump’s proposal were enacted, New York would not see as big a cut as many other states.
“If it actually leads to a tax cut, it will be tilted toward lower income, low-tax states. There will be much less of a tax cut in higher-income, higher-tax states,” he told The Post. That’s because most lower-income taxpayers take the standard deduction, and that would be doubled.
Trump’s plan — still only a vague outline that the administration released on a one-page document — will likely undergo many changes as the White House negotiates tax reform with lawmakers.
So the numbers are speculative, with many unanswered questions, such as what income levels the simplified tax brackets — 10, 25 and 35 percent — would apply to.
But the Empire State remains among the most taxed states, and New Yorkers could expect to take a major hit from the loss of state and local tax deductibility.
In 2014, state residents claimed $68 billion in itemized deduction for state and local taxes, a total second only to those claimed by residents of California, according to IRS statistics cited in the report.
The average state and local tax deduction claimed by New Yorkers who itemized was $21,038 — the highest in the country.