Metro
Published
Oct. 29, 2023, 8:14 p.m. ET
New Study Shows New York Losing Grip as Financial Services Capital
The Empire State is losing its grip as the nation’s financial services capital, according to a sobering new study conducted by the Business Council of New York State. The study highlights the plummeting population of high-income residents, who are fleeing the state due to towering taxes and rising housing costs.
Over the last three years, states like Texas, Florida, North Carolina, and Georgia have attracted talent and investment in the financial services sector, landing new high-paid financial services and insurance jobs. In contrast, New York has ranked 36th in terms of percentage growth, with a rate of only two-tenths of 1%. The report also notes that North Carolina and Florida have rapidly added jobs in the finance and insurance sector, while New York’s employment has remained below national growth trends.
The decline in New York’s financial services industry is concerning due to its contribution to the state’s gross domestic product. Each finance sector employee generates nearly three additional jobs in other sectors, meaning any loss of employment ripples through the entire economy.
The study calls for leaders across New York to address the competitiveness issues that threaten the finance industry. It emphasizes the importance of addressing the state’s tax burden, business climate, and cost of living in order to ensure New York’s position as a national and global leader for finance.
New York’s financial services industry plays a crucial role in the state’s economy, with an average compensation package of $309,000 per year. However, the state has seen a decline in population, particularly in New York City and its suburbs, which are home to most of the state’s wealthiest residents. The largest flight of gross income was observed in Manhattan, totaling nearly $11 billion.
The study highlights the role of taxes in the migration of high-net-worth individuals. New York has the highest combined state and local tax rate on residents, while Florida has the lowest. The report suggests that high-wealth individuals are factoring taxes into their location decisions, as they have the most to gain by leaving a high-income tax state for a low or zero income tax state.
Additionally, the report mentions that New York levies a tax on estates, also known as the “death tax.” This tax, along with the high overall tax burden, is likely influencing the migration of high-net-worth individuals.
The analysis concludes by stating that forceful action is necessary to address the tax burden, business climate, and cost of living issues that hurt the state’s competitiveness. If these issues are not addressed, New York risks losing its dominance in the finance and insurance industry, jeopardizing the health and prosperity of the state’s economy.
It is crucial for leaders and policymakers in New York to take action to ensure the state remains a powerhouse in the financial services sector and attracts top talent and investment. Failure to do so could have significant consequences for New York’s economy and its position as a national and global leader in finance.