A budget study has turned New York’s wealthy out-migration into a political test for Gov. Kathy Hochul. The stakes are bigger than luxury apartments: billions in tax revenue are on the line.
Kathy Hochul was confronted about a study showing millionaires are leaving New York City, putting the New York governor in the middle of a fight over taxes, wealthy residents and the city’s budget future.
The article explains the reported millionaire exodus from New York City, how Hochul responded, and why the Citizens Budget Commission’s findings matter for New York finances and politics now.
The number that rattled Albany
The flashpoint is a Citizens Budget Commission analysis that found New York’s share of the nation’s millionaires fell from 12.7% in 2010 to 8.7% in tax year 2022. The watchdog group said that if New York had maintained its earlier share, personal income tax collections in 2022 would have been roughly $10.7 billion higher.
That figure is why the debate has moved beyond abstract complaints about rich people leaving. In New York, high earners carry a large share of the personal income tax base. When even a slice of that group changes residency, the effect can show up in budgets for schools, transit, policing, housing programs and social services.
The study does not mean every millionaire packed up because of one policy, one mayor or one tax bill. It points to a longer-term loss of share, which can reflect migration, wealth creation in other states, pandemic-era mobility and the way high-income households manage residency.
Still, the political meaning is clear: New York can remain a magnet for wealth and still lose ground if other states are growing faster or attracting more high earners.
Hochul’s answer was tax caution
Asked about the study during a television interview, Hochul pushed back on the idea that New York should answer budget pressure by raising taxes on wealthy residents and businesses.
Her message was straightforward: do not make it easier for high-net-worth households or major employers to justify leaving. Hochul said she wants to “expand the pie,” arguing that job-creating companies and wealthy taxpayers help fund services New Yorkers depend on.
She also pointed to two major forces behind the exodus discussion: the federal cap on state and local tax deductions and the COVID-19 pandemic. The SALT deduction cap made high-tax states more expensive for some households, while remote work and pandemic disruptions gave affluent residents more reason to reconsider where they officially lived.
That answer puts Hochul in a delicate position. She is trying to reassure business and high-income taxpayers without sounding indifferent to affordability pressures facing working- and middle-class New Yorkers.
Why millionaires matter so much
New York’s budget model depends heavily on people with high incomes, especially in New York City. That can be lucrative in good years, when Wall Street bonuses, capital gains and business income generate strong tax receipts.
It can also be risky. High-income tax revenue is volatile because it rises and falls with markets, business cycles and residency decisions. A household with multiple homes can often shift more easily than a renter, a small-business worker or a family tied to local schools.
That is why the “millionaire exodus” debate gets so much attention even when the broader population story is more complicated. Losing a small number of very high earners can matter more to tax collections than losing a much larger number of lower-income residents.
There is another tension: New York City’s appeal is built partly on public services, infrastructure, culture and safety. Those assets cost money. If the tax base weakens, officials must choose among cutting services, finding new revenue or hoping growth fills the gap.
The tax fight is not simple
Critics of higher taxes argue that New York is already testing the patience of wealthy residents, especially when Florida, Texas and other states offer lower-tax alternatives. They see the CBC numbers as proof that “tax the rich” politics can backfire if the people being taxed can leave.
Progressives counter that wealthy New Yorkers have benefited enormously from the city’s economy and should contribute more to housing, transit and anti-poverty programs. They also argue that billionaires and millionaires do not leave only because of taxes; business ties, family, culture, schools and lifestyle all matter.
Both arguments contain a piece of the truth. Taxes influence behavior, but they are rarely the only factor. New York’s challenge is that it competes not just on tax rates, but on whether people believe the cost of living matches the quality of life.
That is where crime concerns, housing costs, office vacancies, transit reliability and school quality become part of the fiscal debate. A high tax bill is easier to defend when residents feel they are getting a world-class city in return.
Luxury homes became a warning sign
The interview also touched on New York’s luxury housing market, including concerns that ultra-expensive apartments are sitting unsold and that proposals such as a pied-à-terre tax could further chill demand.
Hochul described that kind of tax as aimed at very wealthy nonresidents who own expensive second homes, not ordinary people with modest apartments. Her argument was that owners of high-value properties still benefit from city services such as police and fire protection, even if New York is not their primary residence.
That distinction matters politically. A tax on vacant or rarely used luxury homes can be sold as fairness. But real estate interests and tax skeptics warn it could discourage investment, depress high-end sales and send another signal that New York is becoming less welcoming to capital.
The bigger issue is confidence. Luxury real estate is not the whole city, but it often acts like a mood ring for global wealth. When buyers pause, politicians notice.
The unanswered budget question
The CBC study has given Hochul’s critics a clean talking point: New York lost millionaire share, and the lost tax revenue could be enormous. Hochul’s response is to avoid broad tax hikes on the wealthy while still defending targeted taxes on ultra-rich nonresidents.
What remains unclear is whether that balance can hold. New York’s spending needs are large, and pressure for new revenue rarely disappears. At the same time, the state cannot ignore the possibility that its highest-paying taxpayers have more geographic flexibility than they did a decade ago.
The political risk for Hochul is that every budget gap can now be framed as part of the millionaire migration story. If revenues weaken, opponents will say the wealthy were pushed out. If she resists tax increases, progressives will argue she is protecting the rich while everyday New Yorkers struggle.
The fiscal reality is sharper than either slogan. New York needs wealthy taxpayers, but it also needs a city that teachers, nurses, service workers and young families can afford. The millionaire exodus debate is really about whether New York can fund both sides of that promise.
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