Does taxing the rich cause millionaires to flee?

A progressive who wants to tax the rich just won the Democratic primary in NYC. Critics say hiking taxes causes an exodus of wealth from high tax jurisdictions. Is that true?

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On Tuesday, 33 year-old New York state representative Zohran Mamdani stunned the Democratic establishment. By winning the Democratic primary to be the next mayor of New York City, Mamdani derailed former New York Governor Andrew Cuomo’s attempt to bounce back into power after a series of egregious sexual harassment scandals.¹

Mamdani ran on an unabashed progressive platform: rent freezes, free buses, a $30 minimum wage. To pay for it, he proposed boosting the corporate tax rate and adding in an additional two percent income tax on anyone earning over a million dollars a year.

Clearly, these proposed tax changes got the attention of New York City’s richest residents. Preliminary granular election data from the New York Times, pictured below, shows that Cuomo (teal) handily defeated Mamdani (orange) among a specific demographic: the rich people who live around Central Park.

With Mamdani on the cusp of power heading toward the November general election, many of his critics are now invoking a familiar warning:

If you raise taxes on the rich, the millionaires and billionaires will just flee. When they leave, you’ll lose the tax base—and hurt the economy.

This argument isn’t just part of New York City’s politics. It’s central to contemporary British politics under Keir Starmer, where the government is trying to end tax sheltering for non-domiciled UK residents. And it’s the main rhetorical tool used to justify tax policies across the globe that, at times, mean that ultra-rich billionaires and capitalism’s highest earning barons end up paying lower effective tax rates than teachers and nurses.²

Tax policy shouldn’t be made on vibes. It should be based on hard data. And though it has mostly escaped mainstream attention, a series of academics have been making significant progress in measuring the hard realities and fanciful myths of millionaire and billionaire tax flight.

So, is it true that raising taxes on the richest people causes them to flee from that jurisdiction to lower tax havens? Let’s turn to the empirical evidence.