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Goldman: New York Could Lose Top Earners Under Tax Bill

Goldman: New York Could Lose Top Earners Under Tax Bill
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Sunday, 26 November 2017 09:46 PM

New York City could lose some of its highest-income residents if the tax bill making its way through the U.S. Congress becomes law, according to estimates from Goldman Sachs Group Inc.

Initial analysis suggests that the legislation "could eventually lower the number of top-income earners in New York City" by 2 percent to 4 percent, Goldman economists led by Jan Hatzius wrote in a note dated Nov. 24.

The trigger would be a provision that restricts the ability of taxpayers to deduct the levies they pay to state and local authorities, which would disproportionately hit locations with relatively high rates.

Home prices across the U.S. might also decline by 1 percent to 3 percent, Goldman says, through cost-of-capital effects related to a proposed restriction of property-tax deductions.

“We now expect a repeal of the federal deductibility of state and local income taxes as well as a $10,000 cap on the property-tax deduction,” Goldman economists wrote as the Senate prepares to vote for its version of the tax overhaul. "The increased tax gap between high- and low-tax areas may moderately increase moves to the latter."

Republicans are rushing to get legislation to the White House by year-end, read more here.

The move would help to fund some of the proposed Republican federal tax reductions, including corporate and individual rates. Goldman economists said the aggregate impact on states and local authorities would "likely be small" unless pressure rose on those administrations to significantly reduce their own rates.

California, Connecticut, New Jersey, New York and Maryland would see a drop in the value of income- and property-tax deductions of almost 15 percent of their total state and local taxes, Goldman says.

“These changes could create additional fiscal challenges for the high-tax areas, some of which already face structural pension funding issues,” the economists said.

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Economy
New York City could lose some of its highest-income residents if the tax bill making its way through the U.S. Congress becomes law, according to estimates from Goldman Sachs Group Inc.
goldman, new york, earners, tax, bill
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2017-46-26
Sunday, 26 November 2017 09:46 PM
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