New York is declining as a global financial hub, says Goldman Sachs CEO

Goldman Sachs CEO David Solomon said at a Financial Times conference that New York City may no longer be a global financial hub if policies do not change.

“New York has to be aware that there are good choices, and it’s got to keep itself attractive” — especially in relation to “taxes” and “cost of living,” said Solomon.

The tax rates and business incentives that are currently in place are not helping to keep the city competitive and are disincentivizing workers from wanting to live in New York, according to Solomon. “Incentives matter, taxes matter, cost of living matters.”

New York City has the highest tax rates in the U.S. Top income earners are taxed 3.9 percent by the city in addition to the state's 10.9 percent and the federal government's 37 percent.

Wealthy residents of the Big Apple left the city during the pandemic in search of lower tax rates, lower crime rates and a less expensive cost of living. Between March and November of 2020, more than 300,000 residents moved away from the city, according to Business Insider, creating a serious shortfall for city and state revenues.  

"New York authorities expect to see $59 billion in revenue shortfalls through 2022. The city's richest residents, which account for just 1% of the population, had a combined $133.3 billion income in 2018," according to the outlet. "Those one-percenters, though, paid out 42.5% of the city's total income tax. Just 38,700 New Yorkers accounted for a whopping $4.9 billion in tax revenue that year."

Hedge funds are also moving to more economically hospitable states, like Florida. Wall Street executives are citing Florida’s economic policies and living standards as a reason to relocate to the Sunshine State. Goldman Sachs recently relocated over 100 employees to Palm Beach to save money. JP Morgan and Goldman Sachs reported a waitlist of executives looking to move to Florida.

“New York is not going away,” Solomon added. “It is also not guaranteed for any urban center that you have a permanent place in the world.”