Across the Nation
Why Is Leaving New York the Latest Trend?
While the Big Apple may still be a magnet for aspiring artists, culture-seekers, and starry-eyed twenty-somethings, the rest of New York apparently leaves something to be desired. It turns out that leaving New York, not moving there, has established itself as a solid trend.
Between 2000 and 2010, the Tax Foundation found that 3.4 million residents moved out of New York, Forbes listed the state in their feature “The States People are Fleeing in 2014,” and New York was the third highest “moving out” or “outbound” state in United Van Lines’ 2013 Migration Study. So, what’s the deal?
Why the Mass Exodus?
New York has a lot to offer. It’s home to the gorgeous Adirondack Mountains, stunning Niagara Falls, and of course, the Big Apple. Its current unemployment rate of 5.8 percent puts New York in a solid middle position as far as state unemployment statistics are concerned, and at 80.36 years, it has the fourth-highest life expectancy of all states. Yet, according to How Money Walks, people are leaving New York for states such as Florida (gained almost $20 billion in New York AGI), New Jersey (over $12 billion), Connecticut ($6 billion), North Carolina (almost $5 billion), and California ($3 billion). And with all this money moving out of the Empire State, author Travis Brown states, “A New York minute now costs $7,100.”
So why are 61 percent of people moving out compared to people moving in?
New Yorkers are moving for several reasons. For one, they’re looking to get away from harsh winters. In fact, between 2000 and 2010, 600,000 New Yorkers moved to sunny Florida. Then there are economic reasons. The Sunshine State has no income tax and no estate tax — both of which New York charges. In fact, each year from 1977 to 2011, New York ranked No. 1 for the highest tax burden (except for 1984 where it came in second).
The fact is, it’s expensive to live in New York and the additional tax burden over other states is becoming less appealing.
What New York’s Doing to Counteract the Repercussions
While leaving New York may be a reprieve for warm-weather seekers who want to protect their wallets, it’s not good news for the state itself.
When people renounce their New York citizenship, they take their tax dollars with them. The Tax Foundation estimates that New York lost more than $45.6 million in tax revenue over the last 10 years. Going along with that, the Tax Foundation listed New York as No. 49 on its 2015 State Business Tax Climate Index. Last year, it came in dead last.
To combat the non-business-friendly tax burdens, there is a new tax-free zone plan called START-UP NY. This program offers qualifying start-up and expanding businesses a 10-year property, sales, and state income tax exemption (no income tax for employees as well, though income limits kick in after five years) if they move their operations into certain tax-exempt zones. There are quite a few requirements, such as the business having to partner with universities, but the program looks promising. So far, more than 80 companies have pledged to take advantage.
While other states benefit from the influx of New Yorkers and their tax dollars, this migration is taking a bite out of the Big Apple’s finances. Programs like START-UP NY are promising; however, the qualifying red tape that businesses must cut through is often thought of as redundant. If the mass exodus intensifies, perhaps enough changes will be made to New York’s overall tax code to make living and retiring there more affordable. In the meantime, New York residency will continue to decline.