
New Yorkers Trying to Flee High State Taxes Find Moving Isn’t So Easy - kimsk112
https://www.bloomberg.com/news/articles/2018-07-23/trapped-in-new-york-salt-cap-haters-find-moving-isn-t-that-easy
======
jedmeyers
New Yorkers Trying to Evade High State Taxes Find Appearing To Have Moved To
Another State Isn’t So Easy.

~~~
pulse7
Yes, tax collectors are just checking if you really moved or not. So if you
really move, then you will have (almost) no problems.

~~~
praffer
I wouldn't say "no problems." I've been through a New York State residency
audit and it was protracted, stressful, intrusive, and expensive (for
representation -- worth every penny), even though I had indeed really moved
(long before the audit and not specifically for tax reasons), had loads of
evidence to that effect, and was confident I would prevail in the end. (I
did.) It was very unpleasant having it hanging over me for the better part of
a year and I definitely thought of it as a major problem, perhaps the major
problem in my life at the time, until it was resolved.

~~~
tomohawk
This definitely gives me pause when considering moving to a high tax state
like NY. It sounds like the kind of state where you pay your taxes and just
hope the government leaves you alone, which is likely untrue if you are or
become a high earner.

This kind of stuff will likely be litigated for years, especially as people
with means are being harassed in this way. It will be interesting to see which
of these tactics ultimately pass muster. I wonder if you could bring a RICO
suite.

~~~
radicaldreamer
You're buying into a lot of FUD here, there are more high earners in New York
and California than many other states and very few have the kinds of problems
you're describing.

~~~
wernercd
But with pushes to enact higher and higher and higher taxes specifically
TARGETING higher earners... the problem is something that will become more
pronounced as those higher taxes will drive more away.

Whether we are talking tens... or tens of hundreds... it's still nice to know
about a minefield as you work to escape from it.

~~~
throwaway5752
_" But with pushes to enact higher and higher and higher taxes specifically
TARGETING higher earners... the problem is something that will become more
pronounced as those higher taxes will drive more away."_

Which pushes, can you cite a few or a trend where the distribution of tax load
is shifting? Isn't NYS trying like crazy to lower higher income bracket taxes
because the Federal deduction for property taxes was decreased?

------
sonnyblarney
I don't understand how the effective tax rate in NY can be the same as
Ontario, Canada - but here in Canada we have at least healthcare for all
citizens that gets paid for out of that. It's not A+ care but it's good, and
it covers everyone. And it's like 1/3 of the budget, it's a huge line item.

What the heyzeus are you Americans spending all that tax money on?

More on topic: the same issue exists between US and Canada, and it needs to be
sorted. Some ports of entry on the US/Mexico border are not properly set up to
process TN visas etc..

~~~
gravy
America as a whole? Social Security, Medicare, Medicaid are 3 mandatory
spending programs that make up ~45% of gov't spending. Defense makes up ~15%
and is discretionary (albeit also globally projected, though most of which
goes to paying soldiers and maintenance/operational costs). [0]

New York? Mostly on healthcare (~22%) and education (~31%). [1]

[0]
[https://upload.wikimedia.org/wikipedia/commons/thumb/e/e1/CB...](https://upload.wikimedia.org/wikipedia/commons/thumb/e/e1/CBO_Infographic_2016.png/1280px-
CBO_Infographic_2016.png) [1]
[https://openbudget.ny.gov/overview.html](https://openbudget.ny.gov/overview.html)

~~~
sonnyblarney
The US spends _more_ on _public_ healthcare on a per capita basis than we do
in Canada, and for that we get _full coverage for everyone_ \- the US only
gets Medicare/Medicaid and some vet stuff.

Technically speaking the US could wipe out all private healthcare spending,
_reduce_ public spending on healthcare and _still_ have enough over to cover
everyone with 'adequate' care. Granted, it wouldn't be up to par for what many
Americans expect.

Americans pay about 2x for services rendered, though often they are better,
they are not 2x better. That said, someone who only has to wait 6 weeks for a
hip replacement may consider wanting to pay 2x as opposed to waiting 15
months, as they might have to here in Canada.

~~~
gravy
I mean, if you divide the population of the US by 10 then we'd probably get
full, above-average coverage for everyone too.

ETA: Maybe not, given less tax revenue and all. The US healthcare system has a
lot of waste and bureaucracy after all.

------
imroot
I had this problem between Ohio and Kentucky about 10 years ago: I moved from
Ohio to Kentucky, and they both considered me living in their state for the
entire year.

I gave up trying to fight it after about 5 years (!!) and just paid the $15K
to the Commonwealth of Kentucky and moved on with my life.

I now live in Florida -- legally and physically -- and don't have to deal with
the headache of this crazy state income tax drama.

~~~
civilitty
What did they make you pay for when you moved from OH to KY?

~~~
matwood
What happens is that both states want income tax like you lived in the state
for the full year.

~~~
24gttghh
Are they so backwards they don't have a simple form to fill out if that is the
case? e.g. in my state you file an additional schedule [0] to get exempted
from state income tax for the part of the year you were no longer a resident.

[0][https://www.maine.gov/revenue/faq/income_faq.html#faq1040_4](https://www.maine.gov/revenue/faq/income_faq.html#faq1040_4)

~~~
lainga
What's backwards about that? It's a genius way for both state governments to
squeeze a little more money out of people, while being able to write it off as
a "mistake" if anyone complains too loudly. Real backwardness would be giving
citizens a way to pay less money.

~~~
24gttghh
It may be "genius" for the state revenue service, but it is "backwards" in
that it fucks over state residents.

------
matt_s
I don't know why anyone would want to appear to leave. Just leave. The
property taxes are ridiculous, infrastructure is falling apart, etc.

On a recent trip back up there you can tell when you hit NYS roads - rusted
bridges and crumbling asphalt pock marked with pot holes that can damage your
car.

Maybe they should focus on things to make people want to stay?

It would be like a SaaS business changing the contracts so people can't leave
(e.g. can't take data) instead of building features that people want.

~~~
apta
> On a recent trip back up there you can tell when you hit NYS roads - rusted
> bridges and crumbling asphalt pock marked with pot holes that can damage
> your car.

Genuine question: where else in the US are roads better? I've been to several
states and some Canadian provinces, and compared to the developed Gulf
nations, all of the roads I saw there were like what described.

~~~
ams6110
US roads are generally better in the south where they don't use salt or
experience freezing in the winter time.

~~~
AFNobody
You'd think that but in FL at least, there is ~6 potholes on my route to work
every day that have been left there for months.

~~~
wernercd
Maybe you should ask Domino's to help with those potholes.

[https://www.citylab.com/transportation/2018/06/dominos-
pizza...](https://www.citylab.com/transportation/2018/06/dominos-pizza-is-
fixing-potholes-now-and-thats-fine/562829/)

~~~
AFNobody
I already have. lol.

------
justinph
New York is also aggressive about collecting taxes from remote employees. If
you work for a NY-based company, but live in another state, you most likely
have to pay NYS income taxes. Depending on how your _actual_ home state deals
with things, you might end up double-taxed.

~~~
fhood
Well we wouldn't want important services such as the MTA to run out of money
and turn into a dysfunctional and corrupt mess.

Edit: I have a love/hate relationship with NY and NYC in particular.

~~~
jrockway
To be fair, the MTA has largely been NYS's piggy bank for decades. That's why
it's gotten this bad; it's being used to subsidize all the services upstate
that don't generate any revenue.

The New York Times made an interesting video about it:
[https://www.youtube.com/watch?v=COLMODzYX7U](https://www.youtube.com/watch?v=COLMODzYX7U)

~~~
kevin_thibedeau
MTA runs as a net loss. It isn't a piggybank if it is dependent on subsidies
from somewhere outside fares and ads to pay the bills.

~~~
jrockway
I mean, yes, but part of the reason why it runs at a loss is because how it
subsidizes the rest of the state. For example, when the MTA wants to issue a
bond, it has to pay NYS a bond issuance fee. This has added up to about $105MM
since 2006.

------
Latteland
what if two higher tax states both claim they are your home state because they
want to fight over your taxes. this must happen. that's different than moving
'mostly' to a lower tax state. and then what's the threshold for ny claiming
you moved there? what a mess.

~~~
joering2
It happened to my buddy who happens to be millionaire and flies every few
weeks cali versus new york. Two years ago state of california sued him for non
payment of taxes. It went down to literally receipts from gas station making
difference proving he spent over 183 days in new york versus cali. intresting
- credit card purchases were not admitted because state tried to prove he used
proxy (he does) so he could be in any state when purchasing off of Amazon. He
won and gov appealed Then cali went after new york asking for all the evidence
of his taxes knowing new york wont comply. For over year both states fight
with each other with my friend being literally non-involved. Eventually cali
dropped the suit some 16 months after filing appeal.

~~~
everdev
This is insane. Why don't we just pay the federal government the entirety of
our tax obligation and have them partition it out to the states? I'd love to
spend less than half the year in any one state or be completely state-less.

~~~
labster
The whole point of a federal government is to decentralize authority. If the
taxation power rests with a single authority in the United States, then
federalism would be dead and the central government would have all the power.
It's not necessarily wrong (though I believe it would be a bad idea), but this
is one of those questions where the answer to "Why can't the world be simple?"
is "Because the world is complex."

~~~
civilitty
May I introduce you to the 16th amendment:

 _> The Congress shall have power to lay and collect taxes on incomes, _from
whatever source derived _, without apportionment among the several States, and
without regard to any census or enumeration_

The power of taxation has rested with the federal government since the early
20th century.

~~~
swebs
Yes, that is why everyone pays federal income tax. State income tax is an
additional right given to state governments.

~~~
njarboe
Or, in the American tradition, it is a right not forbidden to state
governments.

------
joshuaheard
People aren't moving because the rich would rather pay a little extra and do
what they want.

What I find interesting is that, in following the California real estate
market for the last two years in preparation to moving there, there is a drop
in demand for high-end housing since the tax law took effect. The combination
of higher taxes and lower mortgage deductions has kept a lot of people from
buying bigger houses. I've also seen a lot of empty-nesters downsizing.

~~~
lscore720
New report released today "Southern California home sales crash, a warning
sign to the nation": [https://www.cnbc.com/2018/07/24/southern-california-
home-sal...](https://www.cnbc.com/2018/07/24/southern-california-home-sales-
crash-a-warning-sign-to-the-nation.html)

Interestingly enough, the higher priced homes are the only ones somewhat
holding up. "Sales below $500,000 dropped 21 percent on a year-over-year
basis, while deals of $500,000 or more fell about 3 percent, marking the first
annual decline for that price category in nearly two years,” said LePage.
“Home sales of $1 million or more last month rose just a tad – less than 1
percent – from a year earlier following annual gains of between 5 percent and
21 percent over the prior year.”

~~~
joshuaheard
The article cited higher interest rates. I've talked to other people who say
we are in the tenth year of an average 8 year real estate cycle. I think the
market is peaking now and will downturn in the near future. But, I think it
will be short and shallow consistent with national economic growth.

~~~
joshuaheard
Chinese investors realize the market has topped out.

[https://www.wsj.com/articles/chinese-real-estate-
investors-r...](https://www.wsj.com/articles/chinese-real-estate-investors-
retreat-from-u-s-as-political-pressure-mounts-1532437934)

------
jackconnor
Article is not about people moving, it's about people trying to get registered
in a different state for tax purposes. BIG difference.

------
dixie_land
If you really decide never to set foot in the filthy dump that is NYC, why do
you care about their claim on taxing authority anyways? Can they enforce that
across state line?

~~~
lemonghost
Not to be pedantic but the article is about NY state, NJ, CT etc. Many people
live in NY state but do not live in NYC. Additionally, as the article
explains, some people try to live outside of the state for over half the year
in order to avoid paying state taxes. Presumably, there are considerable
financial and personal incentives for maintaining some presence in NY state.
So, the answer to your question is yes because the people in question are
still typically maintaining a residence in a high tax state.

------
forapurpose
How is the current exceptional focus on taxes a productive policy? Taxes are
investment in your (country/locality). While nobody likes the cost of
investment, our lives and prosperity and everything else depends on it. And
while some investments are worthwhile and some are not (just ask any VC!), to
say we should minimize and avoid all investment is, of course, ridiculous. For
example, nobody would suggest you minimize investment in your home unless you
were leaving soon, or would advice YCombinator to minimize investment in
startups unless they simple wanted to close out business now. You can't leave
your country (or you must live somewhere) and it's never going out of
business, you hope.

Places with low investment (and taxes) in the U.S. and around the world
generally have a lower quality of life and don't produce much beyond rent-
seeking industries such as fossil fuels. Is the goal to model the U.S. economy
on the great successes of places like Alabama,[0] or would it be better to
model it on California or New York? Almost all leading industries, as well as
education, arts and other things, are in high-investment places like
California, New York, Michigan (automobile industry), etc. Successful people
from low-investment areas move to high-investment areas to pursue their
dreams, for straightforward economic reasons: that is where resources are. Tim
Cook, from Mobile Alabama, comes to mind as well as the many entrepreneurs in
SV from India. Almost nobody born in SV moves to Mobile to start their
business. Smart kids from California go to Berkley, not U of Alabama, because
the state has invested in higher education. The smartest kids from Mobile go
to Berkley too (or to other leading universities in high-investment places).

Poor countries are a simple example: They invest little out of necessity and
their citizens are poorly educated and live harder and shorter lives. Under
U.S. tax and investment policy, uniquely among wealthy countries life
expectancy for Americans is now decreasing.

[0] My apologies to Alabamans for using their state as a simplistic example of
low-investment government. Of course there is much more to Alabama than that,
and it's much more complicated than a simple number or stereotype.

EDIT: some clarifications and enhancements

~~~
stale2002
> While nobody likes the cost of investment, our lives and prosperity and
> everything else depends on it.

Yes, taxes are an investment. In the same way that putting money in your
savings account is also an investment. But I wouldn't recommend that anyone
keep all their money in a savings account.

Every dollar that the state takes away from people, in order to invest in
itself, that is one less dollar that each person has to decide how THEY would
want that dollar to be invested.

So higher taxes is not higher investment. It is a reduction in private
investment, in exchange for a increase in public investment. Whether the world
needs more private or more public investment is a matter of debate.

> For example, nobody would suggest you minimize investment in your home
> unless you were leaving soon

Well, that depends. If my choice is between paying off my credit cards, or
investing in my house, I certainly believe that paying off my credit cards
would be a better investment. Every dollar that I personally invest in my home
is one less dollar that I am able to invest elsewhere. And those other
investments may be a more pressing concern. Or they might not.

Also, even IF it is "proved" that a public investment has better returns than
a private one, you also need to take into account that you are taking money
from someone else, and there are moral questions about how much money we
should be taking from other people.

I believe that it is OK to take some money from people, but certainly not all
of it, regardless of how much better the public investment is. What that level
should be is matter of debate.

To take it to the extreme, even IF the government had some amazing investment
that was better than all private investments, I would STILL oppose it if the
government decided to take a full 100% of money from everyone.

This is because I believe in private property, and that people are entitled to
at least SOME of the profits of their efforts.

~~~
xg15
> _Every dollar that the state takes away from people, in order to invest in
> itself, that is one less dollar that each person has to decide how THEY
> would want that dollar to be invested._

Indeed - because it's not necessarily an investment for one's own maximum gain
- it's an investment in communal infrastructure where, yes, others might
profit more from than you. However, in return, you might also profit from the
contributions of others.

> _Also, even IF it is "proved" that a public investment has better returns
> than a private one, you also need to take into account that you are taking
> money from someone else, and there are moral questions about how much money
> we should be taking from other people._

If we're starting with moral questions we should also discuss how morally
justifiable it is to raise the price on products which buyers absolutely need
but where they don't have an alternative. (E.g., recent pharmaceutical price
hikes). This seems just as well "taking money from other people", except that
it's done without any justification at all and, unlike taxes, you don't even
in theory have any say about how high the prices should go or how the money is
spent.

> _I believe that it is OK to take some money from people, but certainly not
> all of it_

Who was even proposing that?

~~~
stale2002
My example of taking 100% of people's money is an extreme example that
demonstrates the moral dilemma of taking other people money, regardless of how
good the investment is.

The OP phrased taxes as an investment, similar to how one would "invest in
their home".

And the comparison is not exactly valid. When I think of "investing", I think
of taking my own money and putting it somewhere, not taking other people's
money.

> Indeed - because it's not necessarily an investment for one's own maximum
> gain

Or maybe it doesn't maximize anything. Maybe other people are able to invest
it better. Just because something is an investment, doesn't mean it is the
BEST investment for society. And you always have to take into account that
this "investment" is taking away money from other people, who might very well
be doing something better for the world with it.

~~~
forapurpose
> When I think of "investing", I think of taking my own money and putting it
> somewhere, not taking other people's money.

I think you make good points, but I disagree here: Almost all investing
involves pooling money with others, including all banking, most business, and
almost all financial instruments. When you buy your own house, unless you pay
cash you borrow from the bank, which involves money from the bank's other
customers being invested in your house.

------
sunstone
America land of the free.

------
wpdev_63
Say what you want about cryptocoin, atleast it doesn't have this
problem:[https://getmonero.org/](https://getmonero.org/)

~~~
millstone
This is false. Cryptocurrency earnings are subject to state capital gains
taxes.

~~~
bumholio
I think the implication was "cryptocurrency cannot be subpoenaed by tax
authorities when you are engaged in fiscal evasion".

This is certainly true, with an off-shore debit card linked to a crypto wallet
one can evade most local taxes, while being exceptionally hard to trace down,
unless engaging in conspicuous consumption.

~~~
JumpCrisscross
> _an off-shore debit card linked to a crypto wallet one can evade most local
> taxes_

This is willful tax evasion. It is a crime for which you go to jail.

