eFinancialCareers:“We earn >$700k. We can’t afford to live in NYC under Biden”

If Joe Biden wins the U.S. presidential election, taxes will rise. And taxes in New York City, New Jersey and California will rise more than elsewhere. 

Biden has committed to increase taxes for individuals earning more than $400k a year, and to focus on the highest earning households. Under his tax plan, households earning $710k a year or more will go from paying an effective income tax rate of 30.7% currently to 37.4% in 2021. At the same time, high earners in California, New Jersey and New York also stand to be impacted by a potential decision not to increase the $10k limit on the State and Local Tax Deduction (SALT), which would allow high earners to offset taxes paid to state and local governments from against federal income taxes.

In combination, the two things stand to create a marginal tax rate of 62% for the highest earners in New York City. It’s not only rapper 50cent who’s complaining. 


“We are all convinced that they will keep the SALT limit AND raise the marginal tax rate on anyone earning over $400k,” says one trader at a major Wall Street bank. “They are basically screwing everyone in finance.”

He says the big fear is that the tax hikes don’t stop there. “You will then have the inevitable state and city hikes, and the property tax increases. My wife and I earn more than $700k and we’re legitimately concerned about our ability to continue to afford living in NYC.”

Hedge fund managers are equally apprehensive. One portfolio manager at a U.S. multi strategy fund said people are starting to leave the city. Paul Singer, founder of Elliott Management, is moving his headquarters to Florida. Others are going to the Hudson Valley, Connecticut and the Hamptons. 


With buy-side firms typically happy to let employees work from home for the foreseeable future, and to move out of New York if they want to, some are suggesting that likely tax rises are a tax on the sell-side. “If you’re working for a major investment bank it’s much harder to move out of New York City,” says one source. “You might just about be able to get away with it if you’re the head of a large product set, but juniors up to recent managing directors are pretty much stuck in NYC.” 

It’s some of these recent managing directors that are squealing about the likely limits to their income. After years of Trump, however, others are sanguine. “I wouldn’t say I’m happy to pay higher taxes, but continuing down this path with Trump isn’t worth it,” says one mid-ranking banker. 

Another managing director puts it plainly. “Nobody I know likes higher taxes, but I think a lot of finance people want a return to normalcy and predictability. Trump is so unpredictable/incompetent that we can’t be sure taxes won’t have to rise even if he wins. – Many finance types will hold their noses and vote for Biden.”

Source: Sarah Butcher – efinancialcareers

 

It does. Though my guess is republican will allow Biden rising tax on top 2% in exchange for not rising tax on big companies. 
It is going to be really hard to rise tax on big companies as it will affect unemployment. Rising tax on top 2% is not so hard.

McConnell must give up one thing to get another. Top 2% people that aren’t ultra rich are people he can easily abandon.

 

Rising tax on highest earning households is probably one of the least controversial thing ,since population being affected is so small and they don’t have much political influence.

 
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I’ve said this many times before (and I’m sure it’s clear to everyone), at that income level you are complaining about a type of lifestyle you want and not about being “able to afford” nyc. I’ve been in nyc through all income levels, and 700k isn’t anywhere near struggling to afford the city, but definitely can be hard to afford a certain lifestyle. It is just a catchy headline/soundbite but is a ridiculous comment to make. 
 

Corporate taxes are different, and may lead firms to change their behavior if they find it too expensive, but there are many variables (where your employees want to be, proximity to other firms, etc). 

 

No just NY. NJ and CA too. But then again, can you find a good finance job not in a blue states?

 

And this is the number 1 reason to vote red. At least people in Florida and Texas can hold their breath for a couple more years. 

 

Why do people keep saying that? It’s out of touch with reality. I know people on this site want a certain lifestyle, so people should at least be clear when saying “not that much money”, it just makes you appear ignorant. You can say that $700k won’t get you the “baller” lifestyle but don’t say it is hard to afford life.

Yes if you want the same standard of living as somewhere like Texas, Florida, places like NC or even Chicago, it will cost you more in nyc. You won’t get a 5,000 sq ft house in Manhattan, not without millions of dollars. 
But living in Manhattan with $700k and 2 kids is absolutely easy to do. You can afford to live in Manhattan, you can afford private school (if you want), you can afford vacations, nice nights out, etc. that is so much more than most of this word can afford. 

 

 

Very likely. McConnell probably will block corporate tax hike but in return yield on charging more tax on top 2%

McConnell also can’t do anything in state and local tax hike.

 

California is also a blue state tax heavily on top 2%

 

Doing that would require repealing the trump tax cuts, but McConnel surely will not allow to pass through.

You are also correct in that because Sen. is likely to stay repulican a SALT Tax cap removal is also increidbly unlikely. 

The most likley outcome is Biden will sit on this for 2 years, out debt is high, it can go higher for another 2, and then dem's will take another swing at snagging back the senate in 2022 in which case the trump tax cuts will likely get repealed, and at the same time the SALT tax cap removed. It'll be a net even thing for me.

Also -- you are absolutely correct. The MD's currently living in NY and CA are about to get aboslutely butt fucked beyond their wildest imagineation. Do not forget the plan to tax social security tax at income > 400k. As well as cap gains at ordinary income if income > a mil. 

They... will.. .be...absolutely... getting....destroyed. Fortuantely, i don't earn W2

 

Most of Trump tax act will stay. But republican will have to compromise on some items to achieve that. Increasing tax on top 2% is one of the easiest thing that two parities can reach agreement on because population being affected is so small.

 

I suppose you can consider this a punishment for failing to get to the level of the real capitalists where you can offshore your wealth. Effectively this is sacrificing the professional class which depend on wages in favor of the elite that thrive on cap gains.

 

Should someone who can't manage his own personal finance, work in finance to begin with?

Never discuss with idiots, first they drag you at their level, then they beat you with experience.
 

found original article. comments are interesting 


1

this is one of the dumbest things i have ever read. you can definitely afford to live in NYC. the people who can't afford to live here are the ones trying to afford their $1000+ rent on a $12/hr wage.  you just don't want to sacrifice your quality of life one bit. slim down on the excess--maybe you'll see that you're not really complaining about this because you actually will not be able to put food in your mouth or afford healthcare.  you're just complaining because you think if you complain publicly, other people will know that you make a lot of money.
 

 2

Really, really? " My wife and I earn more than $700k and we're legitimately concerned about our ability to continue to afford living in NYC." Shut the f*ck up. I'm sick of wealthy people acting as though they are poor. You're not poor. You're in the top 1% of earners and if you want to leave NYC, by all means do, you'll be back

 

 Biden is proposing to cancel $10,000 of a borrower's student loan.


So where do you think money will come from? He will rise tax. Won’t be a corporate tax hike due to republican opposition, more like a hike on high earner.

 

Let’s start the math, In NYC(Brooklyn so no Manhattan prices)

Packer and St Ann’s run 70k a year per child. Brooklyn Friends is 45k. This applies from Pre-K to 12th grade.

Small 800 SF apt is anywhere from 4000-6000 per month. Maybe a 3 bedroom 1000 SF is 6-8 grand a month. Oh these prices are walk-ups not elevator doorman buildings which will cost more. Maybe the upper end is.

Nanny, 45-55k a year. You are a dual income family, you work over 6pm frequently, so daycare is out of the question. Nanny actually breaks even at 2 kids, than day care for both. But at a certain age you still have school and a full time nanny. 3’s programs run 10k-15k for three days a week half a day.

Oh, if you are thinking public school. That’s a great idea, just remember there is a lottery and a shortage of schools. This lottery happens at Kindergarten, middle school and high school. You can get lucky, but a main reason people move in Brooklyn is because your kids didn’t get in to public school in your district.

So you’re about $225,000, all without thinking about 401ks, food, life insurance, car insurance, garage, car payment, savings.(I took the 45k a year school for 2 kids). Parents will sacrifice a lot of lifestyle to get their kids great education.

Assuming a 40% tax rate(all in) you are over $400,000 gross income.

I’m not saying it’s not a good life, but you certainly are not socking away tons of money in this stage, not vacationing in the Maldives, eating at Nobu etc. The above are necessities. Two college educated people should be able to make 200k each in NYC by 30-40 years of age.

 

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