Residents of New England and nearby New York and New Jersey endure some of the nation’s highest tax rates (not New Hampshire). With the capping of the State and Local Tax (SALT) deduction on federal taxes, the bad behavior of these states was revealed to everyone.
You may think that the federal government and those who want to “tax the rich,” are the real winners of the SALT cap, but that doesn’t appear to be the case. The tax the rich crowd isn’t so keen on taxing the rich when that means themselves. And the federal government is giving away far more in revenue than it’s getting with the 2017 Tax Reform, so who is the real winner?
It turns out, low tax states are the real winners, particularly Florida, where many of the North East’s wealthy business owners are headed to avoid increased taxation. Brittany De Lea reports at Fox Business:
Florida – already the recipient of the largest number of out-of-state moversOpens a New Window. in the country – is likely to see its population boom while temporary provisions of the TaxOpens a New Window. Cuts and Jobs Act remain in effect.
According to upwardly revised population estimates from The Demographic Estimating Conference, growth in the Sunshine State will spike over the coming years.
A number of the tax law’s provisions, including the controversial $10,000 cap on state and local tax (SALT) deductions, are set to expire after 2025.
Those changes to the U.S. tax code have encouraged an increasing number of people to move – taking their cash to lower-tax states like Florida. Data from the U.S. Census Bureau showed that while Florida received more movers than any other state last year (net domestic migration of 132,602) – and high-tax New York’s outflows to the Sunshine State were the highest.
Over the coming three years, experts expect more than 300,000 people to move to Florida, each year. And while births and deaths obviously contribute to population changes, researchers say net migration will be primarily responsible for growth.
“Between April 1, 2018 and April 1, 2024, population growth is expected to average 330,605 net new residents per year (906 per day), representing a compound growth rate of 1.53 percent over this six‐year time horizon,” researchers wrote. “These increases are analogous to adding a city slightly larger than Orlando every year.”
Read more here.
I have been warning about high taxation in New England for a long time. It seems Connecticut is at particularly high risk for losing its tax base to friendlier states.
Will the Northern states course correct in an attempt to bring back businesses, or will they double down, taxing the remaining citizens at ever-higher rates until there’s nothing left to tax? That remains to be seen, but in the meantime, it’s up to you to determine where you want to retire. Be sure to make a choice that works for you.
