The Death of New York City

The coronavirus pandemic is accelerating the flight of New York City residents to low tax cities and states. We already knew that New York was hemorrhaging $120.33 billion in annual adjusted gross income by analyzing Internal Revenue Service data from 1992-2018, but with businesses forced to close, restaurants shuttered, and office spaces closing in favor of remote work, even more city residents are finding that the costs of living in New York are too high to justify its benefits.

In a post to LinkedIn published on August 13th, 2020, James Altucher provides a New Yorker’s point-of-view on how COVID-19 has impacted the city he grew up in, and why himself and others are relocating to no-income tax states like Florida, Texas, and Tennessee or low- income tax states like Colorado and Utah. He argues that, while many people and businesses thought they would be temporarily moving from New York to flee the virus, they are quickly deciding to make their moves permanent. He writes that the city itself is empty, with over 90% of office space still vacant during the pandemic. On top of this, the New York Times reports that 1/3rd of small businesses and restaurants in the city may never reopen.

The reality is that many of the vacant office spaces will likely remain vacant, even after the pandemic subsides. This is because businesses have adjusted to the remote-work model and now understand that they no longe need to pay a premium for urban rent. A recent survey of business leaders found that 82% of them indicated they plan to maintain at least a partial work-from-home structure, even after the pandemic ends. Without a physical office space to report to in the city, many workers are finding that they have the flexibility to seek out more affordable living arrangements. When it comes to taxes, a married couple making $75,000 per year, for example, will pay $5,161 in state and local income taxes in New York City. If they could remote work from Florida, they would pay nothing.

Normally the taxes and cost of living of New York are somewhat balanced by the ability to walk across the street to your favorite restaurant, or to hop in an Uber and meet a friend for a Broadway show. But with COVID restrictions likely here to stay for at least several more months, the flight of New Yorkers is being accelerated to no/low income tax states.