DeBlasio's NYC grows, but tax base shrinks
Are New York’s best days behind her?
Until a few months ago, that was a given. A Bloomberg article from a year ago famously reported that the city was losing 376 residents a day, according to the US Census Bureau.
“New York is going off the deep end,” Leon Goldenberg, the CEO of Goldmont Realty, told me for an article a year and a half ago. “We have another few years to get this under control or New York will empty out.”
Then when the 2020 Census numbers came out, showing the highest population total in city history, at 8,804,190, that assumption was overturned.
However, says a prominent think tank founder, the true picture is... complicated. We’re not actually losing people, but the people we’re losing are those who pay the bills.
If so, there is a huge increase in non-payers. Not only is the Big Apple bigger than ever, but its population showed the fastest rate of increase in 30 years. The Census, which aims to provide a snapshot of where the country stands on April 1 at the turn of each decade, found 629,057 more New Yorkers in 2020 than there were in 2010. This 7.7 percent rate of increase is the second fastest since World War II.
What to make of the wide disparity between reputation and reality?
No Actual Exodus
Edmund J. McMahon, founder and senior fellow at the Empire Center for Public Policy, has made it his life’s work to delve into the nuts and bolts behind the statistics. The conservative think tank is one of the most prominent in city politics, and his columns are regularly cited in the business press. He cautions against reading too much into the numbers.
“Some of that is overstated,” McMahon says of reports of the city’s demise. “Trends in either direction tend to be overstated. There’s a flow through New York City, but there always has been. Whenever you hear somebody talking about an ‘exodus,’ quote-unquote, from New York City, keep in mind that if there were an actual exodus, housing wouldn’t be so expensive, because the real estate would be cheaper. There’s that Yogi Berra quote, ‘Nobody goes to that restaurant because it’s too crowded.’ ”
McMahon’s take — New York is indeed growing, but the number of millionaires, the people whose money greases the wheels of the city, is shrinking. He points to just-released IRS data for 2019 showing that the city’s millionaire population dropped to 55,100, from 57,210 the year before. That 3.7 percent decrease in New York came even as the number of millionaire filers nationally grew to 554,340 from 541,410, an increase of 2.4 percent.
But that doesn’t affect the count of millions of low-income people whose residences in the South Bronx and Morningside and Brownsville were duly noted by the number crunchers at the Census. And it didn’t hurt that the city pushed them where to look — during pandemic conditions, to boot.
The census only shows the picture as of April 1, 2020 — “the deepest, darkest point of the early pandemic in New York,” McMahon notes. Tens of thousands of college students were in lockdown, the Census Bureau couldn’t send out its normal coterie of data collectors, and a technological innovation to the most recent count — people could fill out the form online — made it impossible to compare the information from this census to that of previous ones.
Adding to that, McMahon says, the de Blasio administration “very aggressively” pushed the Census Bureau toward addresses not on the official lists.
“The city planning office gave the Census Bureau a lot of these addresses, especially in Brooklyn and Queens, and said, ‘These are not on your list, but you might want to count them,’ ” McMahon explains.
This meant New York’s actual census results showed a significant variance from the Bureau’s annual population estimates, produced from demographic data supplied by states (official reports of births, deaths, new driver’s licenses, etc.).
While Mayor de Blasio had a vested interest in massaging the numbers to counter the image that his economic and law enforcement policies had sent people fleeing, McMahon points out that every mayor wants to see his city “max out its count.”
“Mayors like Giuliani and Bloomberg,” he recalls, “threw everything but the kitchen sink at the Census Bureau and said, ‘Are you sure you counted this big apartment complex on a Coney Island?’ They’d say, ‘There’s a whole new Jewish neighborhood over here, and there’s like hundreds of people there, are you counting that?’ So they got big population counts.”
But those big counts mask the capital flight that seems to be underway. McMahon says it’s “not unreasonable to speculate” that the wealthy are leaving because of New York’s tax rate — the highest in the country — and the perception that crime is out of control. Big Apple emigres are probably going to Florida, and those with jobs in Manhattan are moving to North Jersey.
“Millionaires, especially multimillionaires, those who are really the top of the tip of the top, by definition all have multiple residences,” McMahon says. “They don’t just have one residence, they have two or three or four residences. Invariably, they have a warm-weather residence. And quite often the warm weather residence is in Florida. Well, at a certain point in life, the millionaire and his or her spouse might say, ‘Why don’t we just move full time to the place in Florida?’ Florida has no income tax. But then again, almost anywhere else you go, you are going to pay a lower income tax than you would in New York City.”
Municipalities in New Jersey’s Hudson County all recorded sharp population increases in the recent census. Jersey City, for example, had an 18 percent jump, Hoboken had a 20 percent rise, and Bayonne grew by 14 percent. Some smaller towns had even higher growth: Harrison grew by 43 percent, Weehawken by 37 percent, and Secaucus by 36 percent.
“New Jersey has always been one of the leading destinations for people moving out of New York City,” McMahon says. “New Jersey is New York’s discount dormitory.”
If these wealthy households are in fact relocating elsewhere in the New York megalopolis, the city’s status as the capital of capital won’t be threatened (London and Hong Kong no longer hold a candle to Wall Street’s financial dominance), but in the long term, it can affect how people view the city as a good place to live and work.
“There are only 50,000 or so households in New York that report income of a million dollars or more, and a smaller share of those who report $5 million or $10 million,” McMahon notes. “And this top 1 percent pays over 40 percent of the state income tax, and close to 50 percent of city taxes. So think what happens if you lose just a few of them — every multimillionaire pays as much in taxes as many hundreds of households that are upper middle income.
“That’s not sustainable, and it’ll be less sustainable if we continue to have this erosion of high-income people.”
(Originally featured in Mishpacha, Issue 891)
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