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Here’s How the Wealthy Get More for Their Money

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By Richard Cavalleri @ Shutterstock.com

For decades high tax states have been treating their wealthiest residents like a bank account, with money to be withdrawn whenever state legislators had a new pet project to fund. In the past, wealthy residents were tied down to places like New York, New Jersey, and Connecticut because of their proximity to centers of industry like Wall Street. Today though, the internet allows wealthy executives to operate their businesses from almost anywhere.

With this newfound freedom, many wealthy residents of high tax states have been fleeing for places like Florida, where they get to keep more of their money and enjoy better weather. The caps on state and local tax deductions created by the 2017 tax reform have added fuel to the fire burning under many residents of high tax states, who are now exposed even more to the high taxes of their jurisdiction. It’s no wonder they’re ready to leave.

Juliet Chung and Joseph De Avila report in The Wall Street Journal:

The SALT cap has widened the gap between Florida and other states with no income tax, such as Wyoming, and New York City, where residents can owe income taxes at rates that approach 13%. Previously, individuals would pay a top rate of 39.6% in federal income taxes, plus state and local income taxes, but those taxes were typically deductible for the highest earners. Now, the state and local rates come atop the highest federal rate of 37%.

Connecticut, with a struggling economy, and New York have been shedding residents. Connecticut’s population of 3.57 million in 2018 represents a decline of 22,000 since its last peak in 2013, according to Census figures. New York’s population dipped to 19.54 million in 2018, marking a drop of about 119,000 from its last peak in 2015. New Jersey’s population has been rising.

Those who have made the move to Florida in recent years cite reasons including anticipation of the 2017 tax law change; the high costs in New York compared with the greater purchasing power of a dollar in their adopted home; and warmer weather in Florida, where many of the transplants already owned vacation homes.

Whether or not you’re a millionaire, you should pay special attention to what your state is taking from you each year in taxes, fees, and regulations. Is your small business being crippled by your state’s rules? Is your retirement purchasing power weakened by high taxes? The wealthy are getting more for their money by moving to where it is treated best.

If you feel like your state is taking more from you than it’s giving, you might want to consider your alternatives, especially when it comes to choosing where to retire.

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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.