High-end investment managers are getting a legal separation from New York. Palm Beach is getting the kids.

When Covid-closed offices, restaurants and public venues are able to open for ‘’normal” business it will be clear that the centre of gravity of the hedge fund, private equity and family office world will have shifted to Florida. Specifically to Palm Beach (known locally as the ‘island’) and West Palm Beach. “The move by the industry had already started,” says one Palm Beach investor. “Covid and the confinement has just compressed five years into one.”

The accelerated departure from New York is not something the money managers want to publicise. For example, when Elliott Management announced its office expansion in West Palm Beach, it took pains to say that it would keep office space in New York and would open some space in Greenwich, Connecticut.

Yet as one multibillion hedgie told me: “We do not want to draw attention to our top people moving. But after the end of March, anyone from portfolio manager above will have their electronic key cards disabled for the New York office.”

Of course. If none of the buying or selling decisions are made, physically, in New York, then assets and profits will be, it is hoped, effectively out of reach for the increasingly aggressive state tax people.

The investment management trade does not employ many people. For all the trillions under the notional control of (current and soon to be former) New York firms, there would be only a low five-figure number on their payrolls.

But those include a large fraction of very highly paid-and-taxed people, and they drag a long train of other well paid people behind them. That includes private school staff, trading IT coders, restaurateurs, securities lawyers, property lawyers, divorce lawyers, psychiatrists . . . it adds up.

In the Eighties and Nineties big New York investors were masters of the universe. Now they are richer but considered vultures and usurers. “Moderate” in state politics is now a synonym for “sellout” to the banks, vulture capitalists and landlords.

Pre-pandemic, New York State was collecting taxes at the rate of about $80bn a year. Progressives, led by the public sector unions, want to raise $45bn of new taxes on the rich.

This includes an “ultra millionaires” surcharge of $2.5bn-$4.5bn drawn from those on annual incomes over $5m, a financial transaction tax, which the progressives estimate will bring in $13bn, and $23bn from a wealth tax that would include unrealised capital gains.

Perhaps most twinge-worthy for the mobile rich who have been “counting days” to avoid tax residency, the progressives want to raise $650m in a “pied-à-terre” tax on living space in New York City owned by non-residents worth more than $5m.

Progressive Democrats also show support for restrictions on “vulture funds” profiting from debt restructurings, including Puerto Rico and distressed sovereign issuers.

The wave of new taxes and the bending of New York law away from creditors’ and landlords’ rights tilted the hedgies and PE crowd to become long-term Florida residents, who pay no state income tax.

And like coffee traders, fashionistas and scrap dealers, they like to hang out together in between scheming against each other. So they had to pick a place to recreate their corner of midtown Manhattan. The choices radiated from Royal Palm Way offices on the island, and Flagler or Rosemary in West Palm Beach.

In New York, the prestigious Dalton School has been tabloid fodder for months, with parents reacting against faculty demands for a large increase in diversity staff, required contributions to public schools, and curriculum changes to support racial equity.

Conflicts like that have not been evident at Palm Beach Day Academy, the most selective private lower school on the island. As PBDA told me: “Applications were up 124 per cent during the pandemic period of March-September of 2020 . . . 47 per cent of all new students (2020-21) have come to PBDA from NYC and the surrounding suburbs.”

Just to finish the re-spotting of big money New York, familiar restaurants of the New York rich have reopened in Palm Beach, including La Goulue, Le Boulud, Sant Ambroeus, Swifty’s and Le Bilbouquet. A certain multi-billionaire private equity tycoon just had an indoor party for 60. Each guest was separately ushered into a waiting area for rapid Covid tests.

Why be taxed, freezing and alone?