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New York Gov. Kathy Hochul became the latest blue-state leader to lament the flight of wealthy tax-paying residents to Republican-led tax havens like Florida, Alaska, Wyoming and Tennessee, calling millionaires who stayed in the Empire State to fund its massive social services net “patriotic.”
With Florida Gov. Ron DeSantis declaring his jurisdiction a “free state” for transplants wishing to leave liberal policies and taxation behind, blue states like New York, Illinois and California are squeezing and at times pursuing natives who emigrate to financially greener pastures — while at the same time, some governors are blasting conservative voters as inauthentic neighbors and driving them out in the first place.
Fox News Digital took a look back at taxing authorities and top officials in blue states that have pursued or criticized the very people they are trying to retain for taxation purposes – and those who aren’t simply urging them to return are finding ways to force continued collection.
BRING THEM BACK FROM PALM BEACH
Hochul, speaking during a Politico event this month, said “high-net-worth” people need to stay in New York to support the “generous social programs we want to have in our state.”
“There are some patriotic millionaires who stepped up. OK, cut me the checks. If you want to be supportive — but maybe the first step should be [to] go down to Palm Beach and see who you can bring back home, because our tax has been eroded.”
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‘JUMP ON A BUS’
Hochul has often criticized the most prominent New Yorker to flee to Palm Beach: President Donald Trump.
At a 2022 rally for Rep. Pat Ryan, a moderate Democrat from Ulster County, Hochul trashed Republican-voting New Yorkers and urged them to do what she now wants to see reversed.
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“And we are here to say that the era of Trump, and Zeldin and Molinaro, just jump on a bus and head down to Florida where you belong, OK?”
“Get out of town. Because you do not represent our values. You are not New Yorkers,” Hochul said, while facing off with now-EPA chief Lee Zeldin and criticizing Ryan’s opponent, then-Dutchess County Executive Marc Molinaro whom Trump recently appointed as head of the FTA.
THE ‘TEDDY BEAR’ TAX TEST
Revenue agencies in states like New York have established multitiered tests to enforce residency liabilities for people who split their time between or try to claim other states as their primary home.
In Albany’s lengthy guide to determining whether a taxpayer must consider themselves a New Yorker, a five-part review includes what some attorneys have called the “Teddy Bear Test” – in that it all depends on where you lay your head at night.
A “Near and Dear” factor asks taxpayers to consider the “location of items which the individual holds ‘near and dear’ to his or her heart, or those items which have significant sentimental value” – such as teddy bears.
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“This analysis of ‘Near and Dear’ items can help to solidify the intent of the taxpayer concerning the location of his domicile,” the document read.
Another aspect is whether a person uses or maintains his New York residence at the same level as his out-of-state residence, as it and other states have a 183-day threshold for determining tax liability.
The New York State Department of Taxation and Finance conducted 3,000 nonresidency audits between 2010 and 2017, encompassing part of Gov. Andrew Cuomo’s term, and collected about $1 billion from those who fled the state.
Cuomo, however, appeared to have what pundits called a political “epiphany” when he voiced concern about the state’s lurch to the left on tax policies.
In 2019, The Wall Street Journal quoted Cuomo on realizing what Democratic policy had done to New York’s tax base:
“Tax the rich, tax the rich, tax the rich. We did that. God forbid the rich leave.”
The top 1% of taxpayers foot 46% of personal income tax in New York, which is not alone in trying to keep people in.
REVERSE GOLD RUSH
In 1849, when gold was discovered at John Sutter’s mill not far from Sacramento, people from across the country rushed in to make a buck.
Today, people are reversing flow and trying to escape Sacramento’s reach.
“California … they don’t particularly like when people that were large taxpayers … leave,” Marc Minker, lead managing director at accounting provider and consulting firm CBIZ MHM, previously told FOX Business. “The state becomes very aggressive with respect to making you prove that you essentially changed your domicile.”
While California does not have an explicit “Exit Tax,” the term is thrown around to describe the complex hierarchy of levies and policies Sacramento enforces on people who leave or now only spend part of their year in the state.
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Gov. Gavin Newsom opposed a 2023-24 iteration of an “exit tax” – that would have applied to the wealthiest Californians who leave for the first four years of nonresidency.
If the California Franchise Tax Board (FTB) determines a taxpayer to be a nonresident, their California-based income sources, like rental homes, can still be taxed.
The recent Super Bowl in Santa Clara brought the state’s “jock tax” back to the fore, as Seattle Seahawks quarterback Sam Darnold’s tax liability following his win led to a net financial loss for him.
The FTB also regularly conducts residency audits similar to New York’s, with residency requirements remain more complex than other states’ calculation of number-of-days-spent.
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FTB considers a resident someone who is “present in California for other than a temporary or transitory purpose” or “domiciled in California, but outside California for a temporary or transitory purpose,” according to the San Francisco Chronicle.
Several factors, including voter registration, bank accounts, doctors and memberships, are examined by the state.
LEAVING THE LAND OF LINCOLN
In one Illinois tax tribunal case, Rothman v. Illinois Dept. of Revenue (IDOR), a couple objected to Springfield’s levies as they claimed to be Florida residents. In that case, cell phone records and subpoenas to Uber and Seamless were used to determine whether the couple was from Illinois or Florida, according to a document.
The Chicago accounting firm FGMK wrote on their website that IDOR has a series of factors they use to determine residency including utility usage, relocation of immediate family, school enrollment, homestead exemption status and library card usage.
A bill that had been floated in the state legislature in 2023 would have also assessed unrealized gains of millionaires in any tax year that they attempt to leave the state, called the Extremely High Wealth Mark-to-Market Tax Act.
Fox News Digital reached out to Hochul for comment on her recent remarks.
Fox Business’ Brittany De Lea contributed to this report.
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