As residents flee New York's high taxes, state uses
intrusive audits to get cash from defectors
By Lukas Mikelionis | Fox News
New York State goes to extraordinary lengths to catch
wealthy residents who try to flee its burdensome taxes, leaving a gaping
hole in the state’s treasury.
The aggressive approach by state tax collectors comes as the Empire State
faces a $2.3 billion budget deficit that even Democratic Gov. Andrew Cuomo
called “as serious as a heart attack.”Cuomo, a vocal critic of President Trump, blamed congressional Republicans for passing tax reforms that reduced the state and local tax deduction Americans can take on their annual income tax forms -- meaning residents of high-tax blue states like New York have been feeling the pinch, sparking their exodus.
“This is the flip side. Tax the rich, tax the rich, tax the rich,” Cuomo said last month. “We did. Now, God forbid, the rich leave.”
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New York conducted 3,000 “non-residency” audits between 2010 and 2017, recouping around $1 billion from the practice, CNBC reported.
Between 2015 and 2017, the auditors on average collected $144,270 per audit, with more than half of those who were audited losing their cases.
New York's success rate on audits can be attributed not only to the traditional methods of investigation like going through an individual’s credit card bills, but also to new high-tech tools that include tracking phone records, social media, and even veterinary and dentist records, according to the outlet.
Data show that between July 2017 and July 2018, the high-tax and Democrat-controlled states of New York and Illinois lost the most residents, with New York losing more than 48,000 residents, while Illinois’ population declined by more than 45,000, according to the U.S. Census Bureau.
It remains unclear how many top-tax-paying residents were part of the people who fled the states, but the data show that low-tax red states like Florida and Texas gained new residents.
“If you’re a high earner in New York and you move to Florida, your chances of a residency audit are 100 percent,” Barry Horowitz, a partner at the WithumSmith+Brown accounting firm, told CNBC. “New York has always been aggressive. But it’s getting worse.”
New York is also working extensively to catch those high-worth individuals who fake their move to Florida in a bid to avoid paying steep taxes in New York.
Unlike in New York, where punitive tax rates apply to fund its burgeoning public sector and welfare state, Florida’s residents aren’t subjected to any income or estate tax.
Even Blanca Ocasio-Cortez, mother of pro-tax Rep. Alexandria Ocasio-Cortez, touted Florida’s low-tax system after fleeing the Big Apple.
“I was paying $10,000 a year in real estate
taxes up north. I’m paying $600 a year in Florida. It’s stress-free down here.”
—
Blanca Ocasio-Cortez
Yet New York's get-tough approach toward its former residents may pose some dangers in the long-term. While recouping unpaid money works for the state’s treasury in the short-term, such practices create a hostile environment for the wealthy that threatens to accelerate their exodus.
And with the top 1 percent paying nearly half of the income taxes in the state, New York can’t afford any more departures.
“Even if a small number of taxpayers leave, it has a dramatic effect on this tax space,” Cuomo said last month.
Lukas Mikelionis is a reporter for
FoxNews.com. Follow him on Twitter @LukasMikelionis.
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