Statistics released by the U.S. Census Bureau and the Internal Revenue Service do not bode well for the Empire State and the City of New York.
The IRS announced that the number of federal income tax filers continued to decline between 2019 and 2020.
While over 477,000 filers fled to other states, there were only 248,000 new filers. The net loss, 229,000, is the largest drop since the IRS started tracking the numbers a decade ago.
The IRS report also revealed this frightening fact: While the average annual income of those fleeing is $114,000, the average income of those who have migrated to New York is $83,000.
Overall adjusted gross income for the state is down $23.7 billion. Compared to the other 49 states, New York was the biggest loser. California came in second place with adjusted gross income down $17.8 billion.
As for states that experienced a net increase in adjusted gross income, Florida gained the most at $23.7 billion and Texas came in second at $6.3 billion.
Census Bureau figures released in March confirm New York’s population drain. Manhattan was hit the hardest, losing 110,000 people (-6.9%) between July 1, 2020, and June 30, 2021.
Brooklyn was down 3.5%, Queens off 3.1% and the Bronx lost 3.2%. The total number who moved out of N.Y.C. was 305,605.
On May 23, the Census Bureau struck another demographic blow. It disclosed the bureau had overcounted New York’s population by 625,000 people. The actual number is 19.6 million, not 20.2 million people.
So, the population figure used to determine the number of New York Congressional seats was wrong. If the correct number had been utilized, the state would have lost two seats not one.
What an incredible decline. In 1940, the Empire State had 45 members in the U.S. House of Representatives. On Jan. 1, 2023, that number will be only 26—and should really be 25.
Overall, the state’s population has been falling steadily since 2016. And I expect that to continue.
Here’s why: A survey commissioned by the Partnership for New York City revealed that 40% of people who work and live in Manhattan are seriously contemplating moving out and finding employment in another state.
In the city’s other boroughs, the number who would like to take a powder hit 48%.
Why have so many people had it with New York?
First and foremost, ever-increasing taxes. New Yorkers pay the highest state and local taxes in the nation. A city resident in the highest tax bracket pays a combined federal, state and city income tax rate of 51.8%. (If Congresswoman Ocasio-Cortez gets her way in Washington, that burden will increase to 61%.)
Driving people out on the high end of the wage scale can easily destroy the state and city income tax base. That’s because 40% of income tax revenues come from the top 1% of households.
Other reasons people are leaving the city—increasing crime, growing number of homeless living on the streets, declining and unsafe transit service, filthy streets and lousy public schools.
And when the recession kicks in, those quality-of-life issues will only get worse.
Because a huge drop in the stock market means Wall Street executives will earn less money and will pay less in taxes.
Remember, while the financial industry employs only 5% of N.Y.C.’s workforce, it generates 20% of wages.
As for the state, E.J. McMahon, of the Empire Center, pointed out that “New York’s state budget depends more heavily than ever on taxes generated in the multimillion-dollar tax brackets where incomes tend to correlate more closely with financial cycles.”
Less tax revenues will force the state and city to exhaust its reserves, to utilize fiscal gimmicks and to raise taxes even higher.
With inflation rampant, government employees will demand higher wages—and the political class will add to deficit woes by giving in to their demands.
As taxes and spending continue to climb and quality of life continues to decline, more and more New Yorkers will flee, and the state’s fiscal and economic prospects will continue to deteriorate.
It is a vicious cycle that’s driving the Empire State down the path to financial collapse.