ALBANY, NY — Fiscal Policy Institute Executive Director Nathan Gusdorf today released the following statement:
“A recent article stated that New York State lost ‘$1 trillion in assets’ due to a number of asset management firms moving their headquarters out of state. While one might interpret this to mean that New York State lost $1 trillion in revenue, or that the total assets owned by New Yorkers have decreased by $1 trillion, neither of these are the case. In fact, these business decisions are unlikely to have a noticeable effect on the state’s tax revenues.
“Even though these firms are moving their headquarters to other states, most of their assets will likely still be managed in New York City — meaning we do not expect a meaningful economic impact on the financial sector in New York City. For instance, the New York Post noted that when AllianceBernstein (which manages $685 billion of the $1 trillion in assets) moved its headquarters, it allowed highly-paid portfolio managers ‘to stay in New York given most of their clients remain in the Big Apple.’
“Further, it is a common misconception that businesses are taxed based on the location of their headquarters. In fact, corporations pay tax to New York State based on their profits from doing business in New York, not the value or location of the assets that they manage.
“In reality, some businesses have moved their headquarters for ordinary, non-tax business reasons like the high cost of rent.”
– Myth: Corporations can avoid paying tax to New York State by moving their headquarters.
-Fact: Corporations do not pay tax based on the location of their headquarters; they pay corporate tax based on their profits from doing business in New York State.
– Myth: $1 trillion of assets have moved out of New York.
– Fact: A significant amount of these assets will continue to be managed in New York City.
– Myth: The highest paid employees of an investment firm will move out of state, following the company’s headquarters relocation.
– Fact: The highest paid employees of investment firms often have the most flexibility in terms of working location. As the New York Post describes, the staff who had to relocate to Alliance Bernstein’s new headquarters in Nashville were largely “operations, legal, technology, and compliance” while the highly-paid portfolio managers could stay in New York “given most of their clients remain in the Big Apple.”