The population of New York State had been declining steadily for years before the COVID-19 pandemic.
This trend, which began before 2020, has intensified in recent years, significantly impacting various aspects of the economy, the tax structure, and the overall financial landscape of the state.
State policymakers find themselves at a critical juncture, faced with the formidable task of preserving New York’s allure and affordability as a residential destination and a thriving hub for business activities.
The state has seen over 533,000 residents leave between July 2020 and July 2023.
The largest annual decline occurred between 2022 and 2023, during which over 101,000 people left, as the United States Census Bureau reported, signifying the nation’s most significant population decrease.
In contrast, Texas and Florida maintained their positions as the states with the highest population growth in the country, with Texas gaining over 473,000 residents and Florida adding 365,000.
In an op-ed for the Daily News, writers Tom DiNapoli, New York State Comptroller, and Heather Briccetti Mulligan, President & CEO of the Business Council of New York State, highlighted that the population decline has had repercussions on the state’s Personal Income Tax (PIT) filings.
A report released by the Office of the State Comptroller reveals that in 2020, New York State saw its peak loss period, with 1 out of every 100 Personal Income Tax (PIT) filers departing, marking a fourfold increase from the pre-pandemic average.
Despite a slight recovery, outmigration rates remained highly elevated, particularly among high-income earners and married filers, who are increasingly becoming non-residents and thus only taxable on their New York-sourced income.
DiNapoli & Mulligan stated, “These findings are concerning for the long-term prospects of state revenue. PIT is the largest state tax revenue, accounting for more than $60 billion in 2021, and a small set of filers have an outsized impact on revenues.”
“Those with incomes above $1 million were just 1.6% of all filers but comprised 44.5% of the total liability in 2021. These individuals also realize a larger share of earnings from capital gains and from bonuses, particularly in the financial sector,” the writers added.
The state’s financial and insurance sector faces threats from this migration trend, accounting for 5% of employment and 16% of the GDP.
Despite the sector being a crucial economic driver, job growth in New York has lagged behind national figures, with a steady decline in the state’s share of national industry jobs.
During the State Fiscal Year 2023, the securities industry significantly bolstered New York’s tax revenues, injecting $28.8 billion, constituting 27.4% of the state’s total tax income.
However, a concerning trend is emerging as financial firms consider relocation or expanding their operations outside New York.
This shift poses a substantial risk to the state’s economy, potentially forfeiting billions in economic activity and revenue that could have been generated within its borders.
Republican lawmakers have criticized the state’s leadership and policies that drive people out of the state.
Representative Elise Stefanik in December said, “Far left Kathy Hochul and Albany Democrats have made New York so unlivable that our state leads the nation in population loss with more than 102,000 residents leaving in one year alone.”
Stefanik added, “With record crime and cost of living far beyond the national average, New York’s mass exodus is far from over.”
To counter the state’s challenges, the Business Council of New York State and financial associations released a report highlighting the need for infrastructure, workforce, and business climate improvements to retain and attract businesses.
The report also underlines the importance of affordability, pointing out the disadvantage high taxes and living costs pose to the state’s competitiveness.
The op-ed noted, “The good news is lawmakers have an opportunity to make New York State more attractive to its people and its employers. Exercising spending restraint will be crucial for taxpayers who continue to see high inflation impacting their everyday family decisions.”
It concluded, “Lessening the burden on those who supply the jobs to our friends and families will be beneficial when decisions need to be made about expansion, pay raises, or relocation. Improving the quality of life for our loved ones will have a ripple effect across the state…People leave this state for elsewhere every day for many reasons; let’s not make their decisions easier.”
