A labor-backed advocacy group called Citizens for Tax Justice has struck back against a Partnership for New York City report on the state's so-called millionaire's tax. The Partnership, which represents big business, had argued that the three-year personal income tax surcharge has already caused thousands of high earners to leave New York, and that it should not be extended past this year. Citizens for Tax Justice claimed that the Partnership resorted to “making data up” in reporting that the number of $1 million earners in New York fell 9.4% from 2007 to 2009.
CTJ, which seeks “fair taxes for middle-income and low-income families,” wrote, “The Partnership is implying that millionaires had the magical ability to see into the future and start moving out of New York in 2007 and 2008 as a result of a tax increase that hadn't even happened yet.”
Technically, no crystal ball was needed. The surcharge passed in May 2009. New Yorkers could have left the state in mid-2009 and filed 2009 tax returns as residents of their new states.
But CTJ's other points raise legitimate questions. The Partnership claimed that New York had 381,786 taxpayers who earned $1 million or more in 2007, but CTJ cited Internal Revenue Service data showing only 375,265 tax returns had adjusted gross incomes of $200,000 or more that year.
CTJ notes IRS data for 2009 is not even available yet. The group wrote that the Partnership got its numbers from Phoenix Marketing International, which measured net worth, not “taxpayers who earn $1 million or more,” as the business group claimed.
Kathy Wylde, president of the Partnership, said her study tried to show that extending the tax would only make it easier for legislators to ignore the state's long-term deficit, even if it didn't push high-income earners out of state.
In any case, Phoenix Marketing International's data showed the number of millionaires nationwide fell 13.9% from 2007 to 2009, so New York's drop of 9.4% was better than average, despite the tax surcharge. New York lost proportionately fewer millionaires than 43 of the 50 states, CTJ found.
The nationwide decline suggests that New York lost millionaires primarily because New Yorkers made less money and saw their property values drop during the recession, not because they moved to other states.