Manhattan pulled off a genuinely impressive feat between 2022 and 2023: it attracted more new tax filers than any other county in the entire country, and somehow still lost nearly a billion dollars in income. That's not a typo. According to IRS data analyzed by Fox News, the borough gained the most newcomers in the nation and still watched $922 million in adjusted gross income walk out the door.
The Most Popular Place That's Somehow Getting Poorer
Here's the thing about Manhattan's situation that should make state budget officials sweat through their shirts. Population growth and income growth are not the same thing. Not even close. The IRS migration data, covering 2022 to 2023, shows that the people arriving in Manhattan earn considerably less than the people leaving. You can fill every apartment in the borough and still come out way behind if the outgoing tenants were paying the bulk of your tax base.
This is not a minor accounting rounding error. A $922 million decline in adjusted gross income from a single county in a single year is the kind of number that shows up in budget shortfalls, service cuts, and eventually in the quality of schools and infrastructure that everyone, rich or poor, depends on. Fox News reports this makes Manhattan one of the country's largest single-county income losses from migration, despite its status as the top destination for new filers.
New York Is Not Alone in This, But It Is Leading the Pack
Pull back from Manhattan and the picture gets even more stark. According to the IRS data, Queens County posted the second-largest net loss in tax filers in the entire country, dropping 17,109 people to interstate migration. The Bronx lost 16,319. Suffolk County and Nassau County also cracked the top ten worst performers nationally.
That top ten list? Every single county on it sits in either New York or California. All ten. Not nine out of ten. Ten out of ten. These are also, as Fox News helpfully points out, Democrat-run states with some of the highest tax burdens in the country. The political framing is obvious and a little lazy, but the underlying numbers are real and they are bad.
Where are these people going? Florida. Texas. Tennessee. States with no income tax or low overall tax burdens. The IRS data tracks where filers land after they leave, and the pattern is consistent enough across years that calling it a trend at this point is almost too gentle a word. It's a structural shift.
The Heritage Foundation Has Thoughts, Obviously
Fox News quotes E.J. Antoni, chief economist at the Heritage Foundation, who offers the analysis you would expect from the Heritage Foundation: people vote with their feet, New York keeps losing its most valuable residents, and apparently hasn't figured out why yet. Antoni's exact words are that New York has been "hemorrhaging their most valuable resource."
Look, the Heritage Foundation exists to push a specific set of policy conclusions, and low-tax ideology is their whole thing, so take the framing with the appropriate grain of salt. But the IRS numbers they're pointing to are not ideology. They are a federal agency's accounting of where Americans moved and how much money went with them. You don't have to agree with Heritage's prescriptions to accept that the underlying diagnosis has some real data behind it.
Why Income Migration Matters More Than Head Counts
The critical distinction economists are pushing in this debate is between population migration and income migration. States with progressive tax systems, where higher earners pay dramatically higher rates, are uniquely exposed to this dynamic. You can replace a millionaire with ten middle-income earners and still come out behind on revenue. That's not a moral argument for or against progressive taxation, it's just math.
For states like New York that depend heavily on top earners to fund public services, the composition of who leaves matters as much as how many. Fox News reports that Manhattan's case has become a central example of this phenomenon among economists studying state fiscal health. When your highest earners leave, they take a disproportionate share of the tax base with them, and the new arrivals, however many there are, typically can't fill that gap dollar for dollar.
This creates a structural pressure that doesn't resolve itself quickly. Lower revenues mean cuts or borrowing. Cuts to services can accelerate further departures. It's a feedback loop that city and state governments have to get ahead of, and the window for doing that gets narrower every year the trend continues.
The States Cashing In on New York's Loss
Florida and Texas are the clearest winners in this migration picture, and both have been aggressive about it. No state income tax. Relatively lower cost of living compared to Manhattan or Los Angeles. Warmer weather, if that matters to you. Texas in particular has been on a years-long campaign to position itself as a business-friendly alternative to high-tax coastal states, and the IRS data suggests it's working.
Tennessee and other low-tax Sun Belt states are also pulling in migrants, according to Fox News's reading of the data. The pattern isn't just wealthy retirees heading to Boca. It includes working professionals, business owners, and families making deliberate calculations about where their money goes furthest. When those calculations consistently point south and southwest, states like New York and California face a compounding problem: the people most able to leave are the ones most incentivized to do so.
The Dingo Take
The Fox News framing here is predictable: high taxes bad, red states good, Democrats ruining everything. And yes, they are using real IRS data to make a real point, but let's not pretend the analysis is complete. There are reasons people want to live in New York that don't appear in a spreadsheet. World-class cultural institutions. Density of economic opportunity. The kind of professional networks you can't replicate in a Houston suburb. The story of why wealthy people leave is never purely about tax rates, and anyone who tells you it is has something to sell you.
That said, losing $922 million in adjusted gross income in a single year while simultaneously attracting more new residents than anywhere else in America is a genuinely alarming data point that New York's political leadership cannot keep waving away. The answer to "your wealthiest taxpayers are leaving" cannot indefinitely be "well, more people are arriving." Not when the ones arriving earn significantly less and the ones departing were funding a disproportionate share of public services.
New York and California have to figure this out. Not because the Heritage Foundation wants them to. Not because Fox News is scoring political points. But because the math eventually wins every argument, and right now the math is not on their side. Dismissing the IRS data as right-wing talking points is exactly the kind of complacency that turns a trend into a crisis.
