David Solomon, CEO of Goldman Sachs, has warned New York City leaders that they cannot take its position as a global business destination for granted and that higher taxes threaten to make it less attractive to companies and their employees.
In an interview at the Global Banking Summit of the Financial Times, Solomon said that “New York is not leaving”, but warned “also no urban center is guaranteed to have a permanent place in the world”.
“New York needs to be aware that it has good choices and it needs to make sure it stays super-attractive,” Solomon said. “After all, incentives are important, taxes are important, living costs are important.”
Solomon’s comments come after a coronavirus pandemic prompted some New Yorkers to relocate to lower-tax states like Florida, amid a wider tensions about how the city taxes high wages.
New Yorkers are already paying some of the highest U.S. tax rates, and the state’s highest personal income tax rate would increase further to 66.2 percent under the latest version of President Joe Biden’s Build Back Better Act, according to analysis by the Tax Foundation, an American think-tank.
In March, Solomon was one of approximately 250 CEOs to sign letter Andrew Cuom, the then governor of New York, and state lawmakers who oppose an increase in corporate and individual taxes.
Goldman, which has about 43,000 employees, is headquartered in New York but is expanding to places like West Palm Beach in Florida and Dallas, Texas – two states where the highest tax rates under Biden’s proposed changes would be 51.4 percent.
“We believe in that flexibility, giving people a choice about where they want to live,” Solomon said.
Meanwhile, he predicted pressure to raise wages in the U.S., citing Goldman amplify salaries for their younger bankers earlier this year would eventually ease.
“Here we are in a place where what you see in finance is similar to what you see in almost every industry in general. I don’t think it’s permanent, “Solomon said.
He also reaffirmed Goldman’s plans to expand in China despite escalating geopolitical tensions between the Biden administration and Beijing.
“My own position is that there will be challenges in this relationship, and that could have an impact in the short term on certain activities that we would or would not be involved in China,” he said.
“But generally speaking, with a 10- or 20-year view, our business in China will grow.”