
Miami Woos New York Homebuyers Fleeing Over Tax Law - pseudolus
https://www.bloomberg.com/news/articles/2019-01-11/miami-woos-n-y-s-tax-exiles-as-latin-american-buyers-retreat
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credit_guy
Non-sense. Their example assumes that some new-yorker who earns $10MM as
_regular income_ (not capital gains) not only buys property in Miami but also
moves with the job there. Well, good luck finding a job that pays $10MM in
Miami. But even if you do, it's still non-sense. Here's the tax picture before
and after the new law (from the article):

-before: NYC $5.1MM, Miami $4.2, difference $900k

-after: NYC $4.9MM, Miami $3.9, difference $1MM

So for some reason, you decided the NYC lifestyle is worth a $900k hit in your
total income (which after tax is about $5MM), but $1MM will make you pack up
and move to Miami. Really?

If you earn only capital gains, please note that your property tax rate in
Miami is much higher. Sure, you'll be able to deduct more for federal tax
purposes, but that's faint consolation as overall, you'll still end up paying
more.

All in all, this is probably a submarine piece by the realtors in Miami hoping
to get the rich guys in NYC to spend of few minutes even considering buying
property there. It doesn't matter that the tax calculus does not make sense,
maybe they'll like the sun ...

~~~
ctlby
An anecdote that I previously posted on another thread and will repeat here:

A couple months back, I flirted with moving from NYC to Las Vegas for tax
reasons. I was shocked at the expense of luxury housing there, and
construction costs were similarly high (I was quoted $450-$500/sqft, on par
with NYC). My realtor explained to me that rich Californians were "stampeding"
into Nevada and had increased the cost of all things high-end by
50-100%--basically in the span of a year! She was very bearish on the market.

It seems some measure of rich flight is playing out in California/Nevada;
enough to transform segments of the housing market. It's not far-fetched to
imagine the same with New York/Florida.

~~~
jseliger
I don't know WTF you were looking at, but I was just in LV with my Dad looking
at property. Many of the brand new Turnberry high rises (they're like 20 - 35
stories) rent for $1/square foot/month and sell for like $100 - $200/square
foot. They are absurdly cheap, as most of the other places he looked, and
they're modern.

Keep in mind that some have unreasonable asking prices. So I don't know what
you were looking at, but the market is falling in LV (my Dad has been seeing
price drops over the time period he's been looking). Here is some quick data
via Duck Duck Go: [https://ballenvegas.com/las-vegas-real-estate-market-
report/...](https://ballenvegas.com/las-vegas-real-estate-market-
report/#Existing_Home_Sales_for_October_2018)

~~~
ctlby
All fair points. I'm an outsider, so I don't know what a "fair" price looks
like, or how that's evolved over time. FWIW, I was looking for single family
homes in Summerlin and Henderson. A quick Zillow search indicates plenty of
inventory at $500+/sqft; it was at this price point that I found the homes
began to compare favorably to other luxury markets around the country.

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koolba
There’s two great reckonings coming to high tax States in the coming years.

The first is when people realize that without tax offsets the appetite for
their real estate plummets. It’s already started at the high end and is
working it’s way down to the standard northeast 4/3/2.5 suburbs.

The second reckoning will come after the tippping point of high income earners
leave for low/no tax States like Florida and Nevada. What remains will be an
eroded income tax base with decades of unfunded pension obligations. They’ll
raise taxes further to compensate for the spread in a vicious cycle that will
push out more of the tax base. Fun times ahead.

~~~
helen___keller
I'm not sure I see any evidence the latter one happens in the forseeable
future. Many high tax states hold top-performing cities which are struggling
to handle massive incoming migration that has been happening a good 20 years.

The biggest gripe in my cost of living is by far housing. If I moved back to
my home town in Florida, it would be so I can live near my parents and so I
can afford a house . Not for taxes.

I suppose states without top cities, like Vermont, might run into problems.
But even that is speculation - how many people actually uproot their lives
just to save on state income tax?

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rayiner
What do you mean “many?” Basically just SF and LA. There is huge net domestic
outmigration from day NYC.

~~~
Retric
NYC’s population keeps growing. It had a peak in the 70’s, but it’s never been
larger than right now.
[https://en.m.wikipedia.org/wiki/Demographics_of_New_York_(st...](https://en.m.wikipedia.org/wiki/Demographics_of_New_York_\(state\))

~~~
lotsofpulp
NYC might be okay, it's one of a kind, but I think NJ/CT/IL are in for a slow
long term decay. Their debt numbers are staggering, and they don't offer
anything unique that other places don't.

[https://www.watchdog.org/illinois/by-the-numbers-illinois-
re...](https://www.watchdog.org/illinois/by-the-numbers-illinois-receives-f-
grade-on-national-ranking/article_b0448e98-0a30-11e9-90aa-fb0b253c28c7.html)

~~~
Retric
New Jersey has the second highest household income in the United States.
That’s a significant draw.

In terms of debt to GDP it’s South Carolina and New York that’s in real
trouble.
[https://www.usgovernmentdebt.us/state_debt_rank](https://www.usgovernmentdebt.us/state_debt_rank)

PS: All states combined is 14.79% and NJ stands at 15.69%. So it’s not great,
but it’s not that far from average.

~~~
lotsofpulp
None of the sources in that link seem to include unfunded defined benefit and
other post retirement employment benefits as debt, which they are.

Percentage of taxes going towards paying debt service including benefits for
retired government employees is going to far outpace increase in incomes for
NJ/CT/IL. Plus they have a lot of infrastructure debt to pay.

They're not the worst states to live in, especially if you're making a high
income from NYC or Chicago and need a suburb to live in, but for 90% of people
there's probably a place they can get more bang for their buck tax wise in the
long run.

~~~
Retric
Pensions have frequently been reduced in the US, making such long term
obligations somewhat less dangerous.

Lack of large scale migration means people actually like living there even if
they don’t like specific aspects. SC on the other hand seems to be in a far
worse situation without any clear mechanics for improving the situation.

PS: Looking at federal spending you can see many states are already on life
support.

~~~
lotsofpulp
I don't know about frequently, I've only heard of 2 cases of pensions being
reduced, with Detroit and Rhode Island being very recent and very new
phenomenons. Even then, they are still a large portion of the budget. In IL,
there is state constitutional amendment protecting defined benefit pensions,
and I would love to see the battle between non government employee voters
versus government employees play out.

Either way, you can be sure that the situation will be bad before pensions
start getting cut. And South Carolina might not be good, but there's a bunch
of other states with high growth in incomes, increasing high income
populations, and well funded governments.

~~~
Retric
It’s really common across a wide range of states.

[https://www.nasra.org/files/Spotlight/Significant%20Reforms....](https://www.nasra.org/files/Spotlight/Significant%20Reforms.pdf)

Most of these have limited impact on current retirees, but changing inflation
calculations and capped annual increases really add up.

~~~
lotsofpulp
I don’t see anything in that about cutting accrued benefits, which require
bankruptcy to change, and would be huge news as it was for Detroit and Rhode
Island. NJ has hundreds of billions in unfunded accrued benefits, I.e. debt.

~~~
Retric
It’s designed to seem that way.

Arizona: Retired and current active members _Replaced the Permanent Benefit
Increase (PBI) with a compounding COLA to be based on CPI for the Phoenix
region, with a 2% annual cap._ This was done to save money over time, even if
people see the same check today it’s noticeably lower in 10 years. Over a
possible 40+ year retirement the difference is huge.

Arkansas: Current retirees _Reduced automatic COLA from 3%, compounded, to the
lesser of 3% or CPI, compounded._ Again a single year at 2% compound vs 3%
compound reduces outstanding debt by 1%. Over 20+ years it makes a huge
difference.

Colorado: (2018) Retired and current active state employees. _Suspended COLA
for two years(2018 and 2019)_ They did more, but that alone reduced their
liabilities by around 5%. They had already done a similar thing in 2010 by
requiring retirees to wait over 1 year for their first COLA and reducing the
cap from 3.5% to 2%.

I could go on but you find a lot of these changes that often add up to a 10+%
reduction in benefits and thus costs.

~~~
lotsofpulp
Yes, while those states are doing a better job, that won’t do anything to
lower the unfunded accrued liabilities. It’s going to come out of future tax
receipts, effectively giving future taxpayers the option of paying more taxes
and/or accepting reduced services. Other solution will be for Fed to print
more dollars and inflate away some of the debt, which I’m sure they will do as
they always have.

~~~
Retric
Lowering long term benifits for current retirees directly reduces liabilities.

If I sell a bond paying 5% interest, then say sorry only paying 4% that’s a
lower liability.

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aNoob7000
How's the job market in Miami? I left there about 12 years ago, and even
though I got paid decent money, real estate prices were crazy and only
reflective of the influx of wealthy people from Venezuela and other Central
and South American countries.

I currently live near Atlanta, and I feel jobs and affordability are much
better here.

~~~
imroot
I live in Miami, and the tech scene here is...small, and there's not really a
lot of potential for moving up/around.

There are some good employers with a startup mindset like Ultimate Software
(payroll/HR software) who pay well, but, the pay is marginal for everyone
else. ADT and Office Depot are in the Boca Raton area (great if you've got
Hadoop skills or retail experience), but, I haven't heard that people are paid
above the average around here.

I live in Downtown Miami (and work from home), so, I can't comment on commute:

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aNoob7000
How's the rent in downtown Miami? Last time I passed through Brickell and
checked what rentals were going for I almost passed out?

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appleflaxen
nothing more seductive than waterfront waiting to be submerged within your
lifetime

~~~
vasilipupkin
yes, because NYC is so far inland that it doesn't have this problem.

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C1sc0cat
If they wanted to save on property taxes move to London :-)

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wittyusername
In the UK instead you pay 'stamp duty', whichever you want to think of it is
sort of like paying 10 years of property tax upfront.

