Taxation

The One Tax the Rich Can’t Escape

A billionaire acquaintance of mine who moved from Manhattan to Miami during the pandemic was talking with me recently about New York City’s proposed pied-à-terre tax—an annual surcharge on second homes that are valued above $5 million. When Mayor Zohran Mamdani and Governor Kathy Hochul announced the proposal earlier this month, the tabloids and the business press insisted that it would chase the rich away. But my acquaintance didn’t seem too worried. He had kept his New York apartment, as many recent arrivals to Miami do, and had no intention of giving it up. He is very tied to the city—socially, professionally, and philanthropically—and travels there frequently.There’s a lesson here for cities and states that are considering raising taxes on their wealthiest residents: The specific type of tax matters. The key is to design it around something the rich don’t want to give up—such as their home in the most economically and culturally important city in the world—not something they can easily avoid by simply changing their tax residence.For a long time, academic research said that the rich don’t move because of taxes. Studies of millionaire migration, going back decades, found that high-income households had lower migration rates than the