Stock Exchange in Texas: Geographic Arbitrage

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You know Americans are voting with their feet when it comes to relocating to a better America. The same is taking place with Wall Street as trading moves to places like Florida and Texas, where politics and taxes don’t muck up transactions like New York. The Wall Street Journal’s editorial board explains:

The Texas exchange is also a form of political arbitrage. New York Democrats have long taken Wall Street for granted, imposing punishing taxes and regulation. Progressives in Albany recently threatened to revive a long-dormant stock transfer tax to pay for their migrant and mass transit messes. Go ahead, make the Texas exchange’s day.

New York, the home of Alexander Hamilton and J.P. Morgan, has been losing ground to Sun Belt states for some time. New York’s finance jobs have grown 1.6% since the start of the pandemic compared to 12.2% in Florida and 12.4% in Texas. Goldman Sachs, Wells Fargo and Bank of America have expanded in Dallas.

TXSE says Texas and the southeast “lead the nation in economic expansion and population growth,” adding that the Lone Star State is “home to more Fortune 500 companies than any other state and more than 5,200 private equity-sponsored companies, many of which are preparing to access the public markets.”

These and the more than 1,500 publicly traded companies in the Southeast might prefer listing shares closer to home. Workers on Wall Street might also prefer relocating to a state with lower taxes, an affordable cost of living, and safer, cleaner streets. The top state-and-city income tax rate in New York is 14.8%. Texas has no income tax.

Because Wall Street accounts for a large share of New York tax revenue, the Texas Stock Exchange could pose as much a threat to the state’s tax-and-spend politicians as to the NYSE and Nasdaq. There’s no guarantee the Texas exchange will succeed, but it’s notable that markets are seeking to correct a lack of competition. Mr. Gensler, take note.

Action Line: Just like regular New Yorkers, investors are tired of the overwhelming rules and costs of doing business in New York City. Is it any wonder they’re looking for a better America in one of Your Survival Guy’s Top 10 Super States of 2024? Click here to subscribe to my free monthly Survive & Thrive letter.

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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 (RIP JB) 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.

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