From ‘jump on a bus’ to tax crackdowns: Blue states chase wealthy residents fleeing to red havens

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.

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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.

"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.

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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.

"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.

"This is the 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.