Your Survival Guy

Preparing your investments and family for when disaster strikes.

Disclosure

Are Hedge Funders Packing Their Bags in Anticipation of Tax Reform?

By

Image used under license from Shutterstock.com

As a tax reform bill inches its way through Congress, some of its provisions may have wealthy residents of high tax states considering a move. In states like Connecticut, New York and New Jersey, home to many high earning hedge funders, the state budgets themselves may be under threat if wealthy residents decide to bolt for lower taxes locales. Bloomberg reports:

The problem for the Connecticut hedge-fund set — and, more broadly, for a lot of the Wall Street crowd — is that Republican proposals in both the House and Senate would drive up taxes for many high-earners in the New York City area. By eliminating the deduction for most state and local taxes, an individual making a yearly salary of $1,000,000 — a figure not uncommon in the financial industry — would owe the Internal Revenue Service an additional $21,000, according to a preliminary analysis by accounting firm Marcum LLP.

Billionaire hedge fund managers have blazed the trail south in recent years. David Tepper, Paul Tudor Jones and Eddie Lampert are New York-area transplants to Florida, which has no personal income tax.

A final bill could still do away with the hike, but so far there are no signs coming out of Washington that will happen. Financially struggling New Jersey had the sixth-highest individual income rate this year, according to the Federation of Tax Administrators. New York ranked eighth and cash-strapped Connecticut 12th. Nine of the 10 states with the highest individual taxes, including Washington, D.C., voted Democratic in the 2016 presidential election….

State budgets feel the impact. When Tepper moved his firm to Florida, forecasters warned it could jeopardize New Jersey’s budget because the firm generated more than $100 million in state income tax. In 2013, state income tax generated by residents of seven of the wealthiest towns in Fairfield County amounted to $1.8 billion, according to the Hartford Courant, or about 9 percent of the Connecticut state budget.

“There is a certain amount of burying one’s head in the sand and naivete in Hartford,” Connecticut’s capital, McGuire said. “I don’t think they believe it can happen.”

Read more here.

The following two tabs change content below.
My Twitter profileMy Facebook profileMy Instagram profile

E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.