The most popular argument against high taxes on the rich by localities is that these rich people will simply flee for other, lower-tax locations. According to a new study here in NYC, this is false.
New York City is hell when it comes to taxes. If Rational Economic Man existed, he would pack up and leave this city with no delay. But Rational Economic Man is a fiction, and rich people like good restaurants. The New York Times reports today on a new study by the Independent Budget Office that found that in 2012, high-income households left New York City at the same rate as low-income households, indicating there was no mass fleeing of the rich to escape high taxes. Furthermore, those that did leave tended to go elsewhere in New York, or to Jersey, Connecticut, or California—none of which are known for low taxes.
That means that 86 percent of the households making $500,000 or more that left the city moved to four states with reputations for high taxes. Only 45 percent of the less wealthy households relocated to those states.
Here we have evidence indicating the exact opposite of "Rich people will leave your city if you penalize their success with high taxes." So let's dismiss that argument the next time we hear it. (This argument is also made frequently on national and international scales.)
Rich people like nice things and no amount of tax savings will make up for the fact that Florida is hot, sticky, and infested by the minority of rich people who actually did flee NYC for tax purposes, a.k.a. the most selfish assholes of all.