-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 ...
You've also mixed up your before and afters for NYC when you tried to copy from the chart (NYC became more expensive after the new law, Miami became less expensive). The difference before the new law was about 700k, and the difference after the new law is about 1.2m. As the article says, the difference between taxes in Miami and NYC has gotten $450,000/year worse with the new law, not $100,000 worse.
I think you're probably right about the overall impact being small, however.
If you’re wealthy enough to travel most of the year for businesss or pleasure, why wouldn’t you make your resident state Florida?
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.
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/...
Florida won't be your friend if New York comes knocking.
To give this some specificity, I have multiple former colleagues who live in Connecticut and commute to New York who have had their cell phone location data subpoenaed. If you’re going to decamp from New York for tax purposes, actually decamp.
As a Miami resident, it’s clear that Miami is extremely influenced by NY and NY’ers living there to begin with. So I’m not sure if this is really news. NY’ers essentially built up what is Miami now and there is a strong sphere of influence from NY in Miami.
Miami is basically a satellite economy of NY. The big thing that Miami doesn’t have is high paying jobs. And tech in Miami is virtually nonexistent.
But wealthy folks residing in Miami don’t really need to worry about landing a decent job in the first place.
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.
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?
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
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.
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.
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.
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.
Most of these have limited impact on current retirees, but changing inflation calculations and capped annual increases really add up.
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.
If I sell a bond paying 5% interest, then say sorry only paying 4% that’s a lower liability.
One can only hope that democrats remember how important it was to harm high-output states when they regain power and provide equivalent justice to the loaner states.
The City of New York grew by over 362,000 residents between 2010 and 2016, a growth rate of 4.4% (Table 1). City officials consider this to be among the strongest periods of growth in the last half century (NYC Planning, 2017a). The population grew by 402,000 people through natural increase, and net foreign migration added an additional 500,000 residents. Net domestic migration was -524,000, as more people moved out of the city than moved in. If foreign and domestic migrants are consid- ered together, approximately one person moved out for every person that moved in. The greater NYMA has approximately 20.2 million people and grew by three percent during this period, adding over 586,000 residents. Approximately 672,000 people were added through natural increase while foreign migration added an additional 849,000. The metro lost 903,000 people from domestic out-migration. NYC is a major driver of the metro area’s population change; 62% of the metro’s net population growth occurred within the city.
I don’t see the problem here.
It's funny how the same liberals who call for higher taxes on the rich are so against capping a subsidy that primarily benefits rich people. If anything, the tax bill should've gone further and completely eliminated the mortgage and property tax deductions as these deductions primarily benefit the rich.
It's funny how the same "conservatives" that claim to love small and local government enacted tax policy that blocks states from effectively moving tax revenue from the federal government to the state government.
Whether you think states should be able to claim an uncapped amount of income out from under the Fed, whether you think that this tax policy is more or less likely to encourage smaller/bigger Federal government, it is definitely true that this is a substantial tax increase for anyone holding a large net value of personal property. Note that rental property does not have the same limits, as the deduction against rental income is not capped.
Unfortunately all the people that pushed the policy that resulted in these states being high tax* will be able to move to gated communities, expensive suburbs and overpriced downtown apartments in other states. The people who will be left behind to be burnt will be all the poor people who can't escape the hell they didn't create.
Things tend to bounce between extremes so I wouldn't be surprised if in the next 50yr a few currently high tax states go bankrupt then extremely low tax low service then back to some middle ground.
*High tax isn't a problem by itself. The problem it that high tax states in the US don't turn around and deliver a proportionate amount of public good. A huge amount of the money disappears into an opaque, graft ridden black hole. If people actually got something proportionate in return (like they do in a few parts of Europe) taxes wouldn't be bad.
I certainly agree that there's waste, and more taxes leads to more waste. To your point, though, about "proportional amount of public good", I think there's a case to be made that higher tax areas do generally enjoy better services. An example is in quality of public schools, which is very important to me and my spouse.
NYC and its suburbs (including Westchester and Nassau Counties) are very high-tax areas. If you look at the US News ranking of public high school quality, you'll find that 42 of the top 50 public high schools in New York State are in NYC, Westchester, or Nassau; 3 more are in southern Putnam County (just north of Westchester) or western Suffolk County (just east of Nassau).
There are legitimate questions to be asked about how much signal is in USNWR's rankings, but the quality of schools is one of the things that keeps my spouse and me in the NYC metro area.
I think the effect is large for schools in particular because schools are mostly funded by property taxes which are directly applied to the residents (either directly or via landlords).
I think the relationship between taxes and any given quality metric is going to depend greatly on the who collects the tax, who delivers the service and what the funding route looks-like. There's much less opportunities for waste if a town is using local tax revenue to pay for local services. It's state and federal taxes are at the biggest risk of being wasted on boondoggle projects and graft.
It's a complex problem. The higher a level something is done on the more overhead and the more opportunity for waste but it also has a homogenizing effect because resources are allocated centrally. Central allocation has big risks (if the central authority doesn't want the things you do you're screwed) and less opportunity for compromise (we will never have a federal gun control solution that results in SF, NYC and Alaska all being happy).
IMO the extra waste is not worth the homogenizing effect or the risk in the overwhelming majority of cases. Government decisions should be made and things should be done (including taxes to pay for those things) on the lowest level possible.
The high income earners all fly off to states like Nevada, where the population is low and chances to earn a high income are even lower. That's definitely going to happen. Meanwhile, America's megarich continue to settle and grow their wealth in California, New York, and Washington and upcoming rich folk continue to pop up in those states while the best employment opportunities for other people also tend to be in regions where people are, not where tax benefits happen to be the best. Nevada's advantage is less the taxes and more the rapidly growing population and low rents due to a lack of high income earners driving rent prices up.
I currently live near Atlanta, and I feel jobs and affordability are much better here.
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: