Americans Are On The Move. Where and Why?
Published May 17, 2018
There’s a refugee crisis going on in the United States. It’s like a secret in plane sight. If people are leaving California, New York and Connecticut, where are they going?
Between 2015 and 2016, more than a half-million “economic migrants” decided I’ve had enough of this state and have moved to Florida, Nevada, and Texas, Washington, Tennessee and a few others.
They’re fleeing tyrannical liberalist governments. They’re searching for better job prospects and higher living standards.
These refugees are US Citizens moving within the USA.
They’re wealthy expats from California and New York, and they’re leaving high state income taxes.
According to IRS migration data, from 2015 to 2016, 275,000 tax filers left California for other states. The top destinations were Texas, Washington, and Nevada—states with no state income tax.
New York had 226,806 taxpayers leave. Not surprisingly, Florida was the top destination.
Today, we’re seeing hundreds of businesses and thousands of wealthy people flee high-income tax states to low-income tax states.
Last Wednesday, investment advisory firm, AllianceBernstein (AB for short) announced it’s moving its headquarters from New York City to Nashville.
The reason is simple. Tennessee doesn’t have a state income tax… but New York does.
Florida has no state income tax. And Florida isn’t the only destination for tax refugees. Texas is another. Californians are moving there.
Since 2014, more than 20 companies have left Silicon Valley for “Silicon Hills” in Austin, Texas. Just last year, Toyota moved its U.S. headquarters from Southern California to Plano, Texas (near Dallas).
As always, when this happens, small businesses open in empty spaces, jobs are created, money moves, more small and larger businesses move in, real estate is sold. The once languishing town comes to life! More construction develops. Builders find work available to them again. Investors buy real estate and rent it for a profit. It’s all good business and signs are it’s expected to continue growing into the future.
The exodus of businesses and people from high-income tax states to low-income tax states will only get bigger in the years ahead.
According to Forbes, nine of the top 10 fastest-growing cities in 2018 are in states with no state income tax. (The 10 cities are: Boise, Idaho; Seattle; Dallas; Orlando; Fort Worth, Texas; Las Vegas; Nashville; Austin, Texas; Cape Coral, Florida; and Tacoma, Washington. Note that Boise is the only city on the list in a state with an income tax.)
Of course property values are rising faster in these areas. According to the National Association of Realtors, the average U.S. home price has risen 5.8% since March 2017.
But certain high-growth pockets are rising even more. Florida real estate is up 7.3% on average over that span. Austin is up 10.8%… and Nashville is up 12.1%.
Thank you President Trump!
President Trump’s new tax law caps the amount that residents in high-tax states can deduct from federal taxes at $10,000 in state and local taxes. In previous years, residents could deduct an unlimited amount of state and local taxes.
The tax change gives reason for more wealthy businesspeople to flee high-tax states… and the jobs they create naturally follow them. Thus, what appears at first blush to be a tax hike, in truth is a way to stimulate economic movement and development in “poorer” states. It appears to me, Mr. Trump saw that coming and arranged for it.
Developed from notes from “Contrarian Finance” Newsletter