According to recent reports, there has been a significant decline in New York State tax collections over the past two months compared to the previous year. Specifically, tax collections have dropped by 32.2%, while personal income tax revenue has fallen behind even further at 45%. This decrease can be attributed to a growing number of high-income individuals and corporations relocating their residency from New York to states with lower or no state taxes.
An interesting example is the state of Florida, which has experienced a notable surge in corporate-tax revenue, increasing by an impressive 57.7% year-over-year during the first 10 months of this fiscal year. Florida’s corporate tax rate stands at a modest 5.5%. This upward trend in revenue can be partially attributed to the relocation of the heads of two major real estate brokerages from New York to Florida. In fact, one of these brokerages has even shifted its headquarters from New York City to Florida after being based in the former for over a century.
Given these circumstances, it raises the question of whether New York will continue to be considered a “donor state” in terms of federal taxes. For decades, New York has contributed more in federal taxes to the US government than the state receives in return. However, with the ongoing trend of high-income individuals and corporations departing from New York, there is a possibility that this status may change.
