A new report from the non-profit Citizen Budget Commission reveals that New York lost over $10 billion in personal income tax revenue for fiscal year 2022. The problem is clear: high-income earners and business owners are fleeing. 

The Big Apple’s high taxes, oppressive regulations, and policymaker’s hostile rhetoric have pressured businesses and wealthy New Yorkers to seek refuge elsewhere.

New York City Mayor Zohran Mamdani is exacerbating the problem. As part of his "tax the rich" platform, he has brought renewed intensity against wealth creators in New York City, vilifying and antagonizing them. He would have New Yorkers believe that his policies work, but beyond the messaging facade, New York City is on its way to experiencing the real promise of socialism: a  government-induced decline into poverty.

The mayor's tax agenda is evidence that socialist economics harms the very people it claims to help. Tax hikes won’t solve New York City’s budget problems or increase revenues enough to fund bloated social programs.  Instead, burdensome taxes predictably drive out businesses and high-earners, which is the city’s tax base.

Back in March, Mamdani sought to close New York City’s $12 billion shortfall by lobbying Gov. Kathy Hochul to “tax the rich.” His proposed corporate tax hike and 2% wealth tax were rejected by the state legislature, but an annual  0.5%-4% property tax surcharge on luxury second homes was  implemented on July 1. This “pied-à-terre” tax only raises $500 million per year, less than 5% of the fiscal deficit.

These taxes were never meant to balance the budget but rather incite class warfare.

On April 15, Mamdani announced his new pied-à-terre tax outside Ken Griffin’s home, sending a targeted message to New York City’s wealthiest. Shortly after Mamdani’s “creepy” display, Griffin announced that he was expanding his company’s operations to Miami.

Thousands of high-earners and businesses have fled New York City and moved to conservative states like Florida, Texas, and Tennessee with less taxes, more freedom, and no politicians threatening them outside of their homes. Goldman Sachs, JPMorgan, Citadel, and Wells Fargo are among those evacuating. Wall Street's southern migration rivals New York City’s position as the nation’s financial capital.

New York isn’t the only state to lose their tax base. After California’s 5% billionaire tax proposal, Mark Zuckerberg, among others, made the reasonable decision to purchase a home in Florida, a state with no income tax. 

Under California’s tax, he would have been required to pay $2.4 billion annually for five years, forcing the liquidation of millions of Meta shares. Alphabet co-founders Larry Page and Sergey Brin are also moving to Florida. Now, California won’t touch a dime of their taxable incomes.

Similarly, Washington state's 9.9% millionaire tax proposal incentivized Starbucks to move part of its corporate operations to Nashville, saving the coffee giant $12,000 annually in taxes per worker. Mayor Katie Wilson called for a boycott of Starbucks over disputes with a labor union, a decision that may have cost Seattle $100 million and thousands of jobs. High-tax policies and anti-business rhetoric pushed the historic coffee company away.

Whenever lawmakers pursue policies that seek to redistribute money from  productive businesses and high-earners, they end up driving away their own tax base. Reports show that in the last decade New York has lost $660 billion in  Adjusted Gross Income, while California lost $503 billion. Meanwhile, Florida gained $1.3 trillion, reflecting a total $2 trillion wealth transfer from blue states to red states.

Socialists continue to ignore basic economic principles to the detriment of their citizens, cities, and legacies. The Laffer Curve suggests that excessive tax rates trigger out-migration, shrink the tax base, and ultimately reduce  government revenue. Rather than generating funds to invest in benefits and services for constituents, these policies frequently drive capital flight,  discourage investment, destroy jobs, and inflate prices.

In New York City, the top 1%—many of whom are business owners—pay over 40% of all income tax revenue. A smart politician would hesitate to antagonize  this base or get greedy with their money considering the departure of businesses and high-earners could lead to considerable losses in revenue for the city and opportunities for residents.

States governed by policymakers who believe in encouraging innovation through low taxes, deregulation, and free markets are economically dominant to states which impose destructive socialist agendas leading to capital flight and socioeconomic stagnation.

New York and California are among those learning this lesson the hard way: You can't redistribute wealth once you've driven it away.

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Nicole Huyer is a Senior Research Associate in The Heritage Foundation’s Roe Institute for Economic Policy Studies. Ethan Scroggins is a member of Heritage’s Young Leaders Program.

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