“Tax the Rich” is a catchy, intuitive and politically potent slogan. In a period of rapid wealth creation alongside rising costs and constrained opportunity, it speaks to a real and widely felt imbalance. Whether one sees that divide as a moral failure or a market outcome, it demands attention.

The catchphrase’s simplicity, though, obscures more consequential issues. The challenge facing cities like New York is structural. Taxing the rich, done thoughtfully, can be part of the solution. Done poorly, it can make things worse. The core issue is not simply fairness, which is inherently subjective. It is structural risk.

Consider the composition of the tax base. In New York City, the top 1% of filers, roughly 40,000 households, generate between 40% and 48% of income tax revenue. When such a small group funds such a large share of public services, fiscal stability becomes highly sensitive to the decisions of a limited number of people. Any business with a revenue stream this concentrated would treat it as a vulnerability.

The headline numbers can also mislead. New York City has about twice as many millionaires today as it did two decades ago. That sounds like it should provide stability, but it doesn’t. Over that same period, the US experienced a surge in wealth creation, and New York City’s share of the nation’s millionaires fell sharply, roughly in half. Had the city and state simply maintained their earlier shares, they would be collecting on the order of $13 billion more annually today, enough to close current budget gaps and more.

That wealth did not disappear. It relocated.

This points to a second reality: The tax base is increasingly mobile. High earners today have far more flexibility than in the past to change residency across states or countries. Remote work, multiple homes and global capital markets have reduced the constraints of geography. Taxes, lifestyle, regulation and predictability all factor into those decisions.

Over time, these dynamics create a revenue base that is both highly concentrated and highly mobile. That is not just a fairness question. It is a risk management problem.

To be clear, fairness still matters. But fairness alone is not a strategy for sustaining public finances in a competitive, mobile world.

It is worth stating something often avoided in political debate. Governments should be cautious about demonizing the very people they depend on to fund public services. When political leaders frame high earners primarily as adversaries, they may gain rhetorical advantage, but at the cost of undermining the stability of their own tax base.

If the goal is long-term fiscal health, the question is not how to win an argument. It is how to build a system that is both resilient and broadly supported. That requires focusing less on costs alone and rather on how to help more people earn more.

It helps to look at how wealth is created. Modern wealth is deeply tied to place during its formation. Financial services depend on dense networks of capital and institutions. Technology depends on proximity to talent, research and investors. Public infrastructure, education systems and civic stability all play a role.

But wealth also has a lifecycle. Once assets are accumulated and income streams are established, the connection to place weakens. The decision about where to live becomes more sensitive to taxes, lifestyle and predictability than to local economic ecosystems.

This helps explain a pattern that is visible across the country. High-productivity regions such as New York and California tend to generate wealth. Lower-tax jurisdictions including Florida and Texas tend to attract it later.

If that is the dynamic, adjusting tax rates alone won’t be sufficient. Sustaining a tax base requires both understanding behavior and broadening participation.

On behavior, governments devote enormous effort to analyzing corporate location decisions. They rarely apply the same rigor to individuals at the top of the income distribution. Cities are competing for residents and capital whether they acknowledge it or not. A more systematic approach to understanding what drives relocation and what anchors people in place would be a logical starting point.

For example, a city like New York could look at consistent surveys of the wealthy, undertaken via intermediaries such as private banks, accountants, family offices and the law firms that cater to them. Singapore and Switzerland are fairly well known for doing this .

But retention alone is not a durable solution. A more stable approach is to expand the number of high earners rather than relying heavily on a small group.

This shifts the focus to economic mobility. Affordability is often framed as a cost problem. In reality, it is a ratio between what people earn and what things cost. Costs in dense, high-demand cities can only be reduced so far. Income has no inherent ceiling.

There are clear opportunities to raise earning power. New York State, for example, is home to roughly 200,000 college-educated immigrants who are either unemployed or working in low-wage jobs, many trained in fields like nursing, engineering and medical technology. Licensing barriers and slow credential recognition prevent them from working at their full capacity. Moving even a portion into higher-skilled roles would generate billions in additional wages and substantial tax revenue.

More broadly, expanding access to technical skills and reducing unnecessary barriers to starting small businesses would help deepen the tax base. A broader base is inherently more stable than a narrow one. An Office of Economic Mobility focused on removing obstacles to advancement would be a good addition to the current policy framework.

Finally, if wealth is created in one place but realized in another, the tax system itself may need to adapt. Currently, capital gains are taxed based on residency at the moment of realization. That means an asset that appreciates over many years in one state may generate no tax revenue there if the owner relocates before selling.

A more measured approach would allocate capital gains based on residency during the holding period. This would not restrict movement, but it would better align taxation with where value was created.

“Tax the rich” will remain a compelling slogan because it captures a real concern. It is not inherently wrong. But slogans are not strategies, and demonization is not constructive in the face of fiscal vulnerability. The underlying challenges are concentration and mobility. Addressing them requires understanding behavior, expanding opportunity and aligning policy with how wealth is actually created and moves.

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This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Nicolas S. Rohatyn is the founder of The Rohatyn Group and a trustee of the Citizens Budget Commission.

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