Rich New Yorkers are getting hit hard with record tax bills — unquestionably among the nation’s steepest, according to tax preparers and planners.
The tab is so high that analysts see the tax shock propelling the flight of wealthy New York residents to states with lower taxes, and a much cheaper cost of living.
“Many are selling securities in order to pay their tax bill,” John Graziano, an accountant and financial planner who handles returns for numerous New York City residents. “Some have discussed moving to a so-called lower-tax state.”
And while none of his tax-choked clients have yet loaded up the moving truck, many are mulling whether purchasing a second home in Florida now makes financial sense, as the reality of local and federal laws finally take a deeper bite. Last year was the first full year of the federal tax reform, which limited state and local tax deductions, or SALT, to a $10,000 maximum.
“A self-employed New York City businessperson client who earned about $1 million in 2018 now owes the Federal government $48,000 more this year than last,” Graziano told The Post. “Those who were getting $5,000 to $10,000 back are now getting less than $5,000.”
Other preparers report similar large surges in tax bills for rich Gotham clients filing their returns this year on 2018 income. And while some middle-class residents may be ahead when their previous 2018 tax payments on salary and the like are factored, many preparers are not holding their breath.
“A lot of otherwise well-off people who were used to getting $4,000 to $5,000 back, are now scrambling to pay their tax bill,” said financial adviser Gary Schwartz of Madison Planning Group. “They’re tapping savings and/or borrowing from wherever they can.”
By contrast, taxpayers in a nationwide survey — likely underlining the stark regional differences in taxation outcomes by state — are sounding almost chirpy.
Of the 74 percent of US adults who’ve filed taxes in 2019, 2 in 5 are “happy with the outcome,” and an additional 25 percent “are neither happy nor unhappy,” according to the survey by the National Endowment for Financial Education (NEFE). Thirty-three percent are “unhappy.”
“The results don’t seem to align with what we’ve been hearing anecdotally about people’s feelings of filing taxes under the new tax law,” said Billy Hensley, president and CEO of NEFE. “Despite a perceived unhappiness, the good news is the largest proportion of people say they’re satisfied with their tax filing outcome,” he added. “More good news is that people continue to report they are doing positive things with their refunds, like building savings and paying down debt.”
According to the NEFE survey, a mere 7 percent of filers paid more on their federal taxes this year than they typically paid in the past.
Put many New York City and State residents in the unhappy category. “Since the tax code was changed so quickly, many were caught off-guard and are complaining that their taxes are subsidizing corporations,” said Schwartz. “It’s a double whammy when you factor in the impact of the SALT cap.”