800,000 People To Flee New York & California In Next Three Years

Over the past decade, more than 3.5 million Americans have left high-tax blue states like California, New York, and many others in the Northeast, for low-tax red states like Arizona, Florida, and Texas.

While the migration has been happening for years, conservative economists Arthur Laffer and Stephen Moore are forecasting the next significant movement out of blue states could be right around the corner.

Earlier this week, in an op-ed in the Wall Street Journal titled “So Long, California. Sayonara, New York,” Laffer and Moore spoke about a provision within the brand-new tax bill that could create a mass migration of roughly 800,000 people - fleeing their estates in California and New York for better days in low-tax states over the next three or so years.

Both authors said capping the deduction for state and local taxes (SALT) to $10,000 will accelerate the velocity of the migration of high-income earners from the Northeast and California to regions like “Arizona, Nevada, Tennessee, Texas, and Utah.”

“High earners in places with hefty income taxes - not just California and New York, but also Minnesota and New Jersey - will bear more of the true cost of their state government.

Also in big trouble are Connecticut and Illinois, where the overall state and local tax burden (especially property taxes) is so onerous that high-income residents will feel the burn now that they can’t deduct these costs on their federal returns. On the other side are nine states - including Florida, Nevada, Texas and Washington—that impose no tax at all on earned income.”

The authors describe how a high-income earner in Silicon Valley or Hollywood would see their effective income-tax rate in California surge from 8.5 percent to 13 percent. The pair also said similar figures would be seen in Manhattan, once New York City’s income tax is factored in. This would mean, a high-income earner in NYC making $10 million or more could see a potential tax hike of 50 percent.

Laffer and Moore are speculating that these hikes could be the trigger point to spark an exodus of residents out of high-tax liberal states to lower or no income tax regions.

“In the years to come, millions of people, thousands of businesses, and tens of billions of dollars of net income will flee high-tax blue states for low-tax red states. This migration has been happening for years. But the Trump tax bill’s cap on the deduction for state and local taxes, or SALT, will accelerate the pace. The losers will be most of the Northeast, along with California. The winners are likely to be states like Arizona, Nevada, Tennessee, Texas and Utah.”

Although 90 percent of taxpayers are untouched by the change, high-income earners in places with overbearing income taxes — such as California, New York, Minnesota and New Jersey — “will bear more of the true cost of their state government,” said the pair. Liberal states like Connecticut and Illinois could be in serious trouble, as high-income earners “will feel the burn now that they can’t deduct these costs on their federal returns,” the authors added. However, on the flipside, there are nine states — including Florida, Nevada, Texas, and Washington — that impose no tax at all on earned income.

Since the global financial crisis in 2008, low-tax states like Texas and Florida have gained nearly 1.4 million and 850,000 residents, when compared to other states. On the other hand, California and New York have collectively lost more than 2.2 million residents in the same period, according to Laffer and Moore.

The pair said the exodus could force a crisis for liberal states, meanwhile, red states should brace for an influx of new residents.

“Red states ought to brace themselves: The Yankees are coming, and they are bringing their money with them. Meanwhile, the exodus could puncture large and unexpected holes in blue-state budgets.”

They also said high-tax blue states should realize that the shift could force a “fiscal bloodbath.”

“As far as we can see, the only way for blue states to prevent this coming fiscal bloodbath is to start taking tax competitiveness seriously — and to cut their tax rates in response. Progressives should do the math: A 13% tax rate generates zero revenue from someone who leaves the state for friendlier climes.”

“Blue states ought to be able to lower their taxes and spending dramatically without jeopardizing vital services,” the pair write, warning that as the battle for residents among states heats up, high-tax blue states will either have to lower taxes or face a “fiscal bloodbath.”

Meanwhile, Texas Republican Gov. Greg Abbott fired the first shot at New Jersey residents last week, enticing them to migrate to Texas for lower taxes.

Comments

macholatte toady Sat, 04/28/2018 - 10:29 Permalink

 

Liberalism is Mental Disorder.

Migrant Progs will infect every jurisdiction in the country like a virus getting released into the air when a boil pops.
Red States need to quickly pass laws quadrupling taxes on migrant Democrats and force them to take a literacy test before being allowed to vote.  Like the judge said, there is no law against discriminating against a person based on their political views.

 

In reply to by toady

Déjà view toady Sat, 04/28/2018 - 10:40 Permalink

Can run...not hide!

Putting Texas' problems into perspective 

To put Texas’ local debt problems into perspective nationally, consider a new report from the BRB: Among the top ten most populous states in the nation, the principal amount owed by Texas is $225 billion and is the 2nd largest total next to only California who is $268 billion in the hole. Meanwhile, Texas’ local debt per capita of $8,350 ranks as the 2nd highest total, behind only New York’s $10,646 per capita. Both the aggregate amount owed and the debt per capita are well in excess of the nationwide averages.

https://www.forbes.com/sites/realspin/2016/02/26/the-texas-borrowing-bi…

Tejas...'Loan' Star State...

$i $eñor!

 

Although state debt is a problem that must be addressed, the elephant in the room is state pensions.

https://www.texaspolicy.com/blog/detail/fragility-of-texas-state-debt-a…

 

The Comptroller has pointed to Leander ISD as the “poster child” for CAB’s.  According to the Texas Bond Review Board, Leander ISD owes just under $1 billion in principal debt – but their interest is currently more than 2X that amount.  To be more precise, Leander ISD’s debt principal is $1,088,319,288; their interest due is $2,369,444,925 for a total debt load of $3,457,764,213. 

Leander ISD has a debt load per student which is five times what some similar districts have.  Tax supported debt per student is around $75,000 in Leander.  What we are doing “for the kids” is being done “to the kids” as they are who inherits this long-term debt. 

Leander ISD taxpayers approved bonds of around $1 billion and are shocked to learn they owe almost $3.5 billion

https://americansforprosperity.org/capital-appreciation-bonds-no-way-to…

 

To borrow all this money, Texas localities have resorted to financing techniques typically associated with struggling communities looking to push costs off into the hazy future. Texas municipalities have made liberal use of so-called capital-appreciation bonds, which let the issuer make no payments to bondholders for years. Such bonds often increase the total amount that a community must pony up over the long term, meaning big bills for future taxpayers.

https://www.investors.com/politics/commentary/in-fast-growing-texas-loc…

In reply to by toady

Pool Shark two hoots Sat, 04/28/2018 - 11:40 Permalink

The Supreme Court has already ruled against the states on that issue.

When you leave the state, you take your pension with you, and the state has no authority to tax it (since you are no longer a ‘resident’).

That’s one of the main reasons states like Kali, Illinois and New York are doomed.

Once the Boomer pensioners retire and leave the state, they stop spending into the local economy, which will hasten the fiscal collapse.

 

Bye, bye high-tax Blue states...

In reply to by two hoots

Stan522 thisandthat Sat, 04/28/2018 - 16:59 Permalink

It's NOT the Prog's leaving kalifornia...... This Constitutional conservative, second ammendment supporting expat ditched kalifornia with my conservative family for Nebraska last July...... I still work for a Socal company but remotely.... Yes, I have to split paying state taxes between the two states, but I don't spend one red cent of it in kalifornia......

In reply to by thisandthat

Lost in translation toady Sat, 04/28/2018 - 11:48 Permalink

Anyone here been to AZ lately?

We've scratched it off the list of potential AK/AR-friendly hideouts.

Phoenix is a sprawling, Third World slum.

Marxist public school teacher walkout events, “Red With Ed,” etc.

Cookie-cutter, Cali-style shitshacks devouring farmland and desert alike in epic, SoCal suburb-like fashion.  To wit, Buckeye, Anthem, et al.

Prescott resembles Los Angeles in the ‘60’s.

Flagstaff is SJW/avocado toast-ville.  Rainbow signage in business windows read, “NO FIREARMS” and “STOP THE HATE!”

Sedona is West Hollywood + Laguna Beach without an ocean nearby.  Wiccan fagtown.

Public housing authority manages much of Williams.

Poverty in Cottonwood.

Poverty in Camp Verde.

Poverty most everywhere you look.

What will become of AZ when retired CA copgang members see their government pension cut by half?

Where will the water for all of these newcomers, come from?

”Bill Gates is bringing his Desert City of Tomorrow here, soon!” a business owner in Avondale told me last month.

———

AZ is already fucked.

In reply to by toady

Ima anal sphincter Lost in translation Sat, 04/28/2018 - 12:33 Permalink

I don't want these pukes in Texas either. Houston is busting at the seams. Traffic and people, mostly Spics and Niggers. Some actual Latinos and Blacks (working brains, but such a small percentage as a whole).

Dallas (the LA wanna-be) is worse. Stuck up punks in their BMW's, Mercedes, and Lexus cars trying to make themselves "seem" important. Dallas traffic REALLY sucks. Cranes everywhere.

Austin, liberal dumbass capital of the world.

San Antonio, spics.....enough said.

Shooting for east Texas in the winter. Northern I-be-da-hoe in the summer. Anywhere that keeps me away from all these clueless idiots.

In reply to by Lost in translation

serotonindumptruck Lost in translation Sat, 04/28/2018 - 14:38 Permalink

I lived in Moscow for about 5 years. It's a typical leftist college town with tie-dyed hippies who can provide one with an excellent source of high-quality weed, and the over zealous cops who are willing to haul them to jail for a slightly used roach clip.

On the plus side, it has an over abundance of fresh young poon tang thanks to the two major universities (U of I and WSU) in the area. The pedestrian friendly downtown area has many decent clubs and restaurants, and you're usually within crawling distance from a place to crash out at.

Idaho is a "shall issue" state for CCW, but many businesses in Moscow have signage that prohibits it.

In reply to by Lost in translation

silverer toady Sat, 04/28/2018 - 13:05 Permalink

There should be no property tax. I'm told that in Hungary, for instance, you pay a one time up front tax when you purchase. Maybe about 10%. After that, there is no more tax. So if you lose your job, and they turn off your electricity, you only need to feed yourself, and you'll still have your house. After all, it's yours if you paid for it, right? In the US, they just take it away from you.

In reply to by toady