It is important to analyze your political situation. Is your state taxing you unfairly? Is there an alternative? I wrote this piece on October 8, 2018 to encourage Americans to think about what happens when wealthy taxpayers flee punitive taxation. Who will pay for a state's government when there's no one left with any money? My friend Chris Edwards, director of tax policy studies at Cato and editor of www.DownsizingGovernment.org, outlines the hypocrisy in the way states run their tax schemes. He points out that states' biggest tax payers are sensitive to the top marginal rates, and when … [Read more...]
Southern Migration
If you’re a politician the easiest way to grow “revenue” is to treat your successful residents with respect—respect for their money that is. And yet time and time again politicians do the exact opposite. Is it any wonder the most successful New Yorkers spend at least half the year in Florida? The Wall Street Journal editorial board chides Governor Andrew Cuomo for his tone deaf assessment of why people are fleeing the Empire State. They write: Andrew Cuomo is on a roll. After a deft rebuttal of President Trump last month—America “was never that great”—the New York Governor has now finessed an … [Read more...]
When Governments Compete, Citizens Win
One of the less touted but possibly most significant outcomes of the Trump tax reform was forcing states into greater competition over taxation. States with already high taxes had the sheet pulled off their ugly policies. The tax reform bill stripped those high taxing states of the federal deductions that had masked their inefficient policies. With all states now competing on an even playing field, citizens are getting a first hand look at just how badly their states have been bilking them. At the Cato Institute, Chris Edwards writes that high income earners, who were already fleeing high … [Read more...]
Cato’s Chris Edwards: Tax Reform and Interstate Migration
“I divided the country into the 25 highest-tax and 25 lowest-tax states by a measure of household taxes. In 2016, almost 600,000 people moved, on net, from the former to the latter,” writes Chris Edwards, director of tax policy studies at Cato in his study Tax Reform and Interstate Migration. “People are moving into low-tax New Hampshire and out of Massachusetts. Into low-tax South Dakota and out of its neighbors. Into low-tax Tennessee and out of Kentucky. And into low-tax Florida from New York, Connecticut, New Jersey, and just about every other high-tax state.” Read more … [Read more...]
Cato’s Freedom in the 50 States Ranking
The Cato Institute has released its much anticipated Freedom in the 50 States ranking. Scoring best of all fifty states was Florida. The researchers who put together the scores highlighted Florida's lack of an individual income tax and the Sunshine State's economic freedom as its top draws. Here's what they wrote about Florida: Lacking an individual income tax and featuring a hot climate, Florida has long enjoyed substantial migration of well-off retirees. But as we’ve noted in the past, the state attracts more than seniors, as others vote with their feet for good weather and the increased … [Read more...]
Work, Live and Save Money in these Three Power States
My take-away from this excellent piece by Joel Kotkin is that keeping more of your money matters. In other words, state taxes matter. Look at the magnetic pulling power of the three power states in the sun belt with no income taxes: Texas, Tennessee, and Florida. It turns out state lines can be re-drawn with the help of overbearing government excess. Because the new California is Texas and Tennessee, and the new New York/New England is Florida. Money travels to where it’s treated well. Just don’t tell the politicians. Kotkin writes in Forbes: Among the 71 largest metro areas, the biggest … [Read more...]
A Japan-Sized Hole in U.S. Pensions
If you have been following my writing for any length of time, you'll know that I have been loudly and regularly sounding the alarm bell on the pension systems of America's cities and states. Here is a sampling of the pieces I have written on the subject: Pensions are Still Hiding from the Truth Dangerous Rules Make American Pensions Riskier Pensions Should be Fearful Pensions: Left on the Hook will be the Taxpayer Pensions in a Load of Trouble Today, Sarah Krouse reports for The Wall Street Journal that the pension hole in the United States for cities and states is the size … [Read more...]
Tax Cuts to Improve Your Retirement Portfolio
President Trump has a golden opportunity for a second round of tax cuts by indexing capital gains for inflation. I can’t tell you how many times investors have wanted to make their portfolio more conservative but did not because of onerous capital gains. In other words, they kept more money in stocks, against their more prudent instincts, simply to avoid cap gains. This is how serious money is lost as witnessed in the markets twice so far this century circa 2000 and 2008. Kimberley Strassel of the WSJ explains how Trump could cut taxes with the stroke of a pen: What if President Trump had the … [Read more...]
How Red States are Winning the Jobs War
It turns out that one of the keys to business success is lowering costs. That doesn't just mean for raw materials, but also for government imposed costs like taxation. The places doing the best job of lowering those taxes and attracting more business are red states like Texas. In The Wall Street Journal, James Freeman explains how one private equity firm is making money moving software firms from high tax states to low tax states like Texas. Yesterday I told you that CNBC had classified Texas as the best state for business. This is an example of what makes that so. Freeman calls it the … [Read more...]
California: Driving Away Success
Despite the allure of Silicon Valley, Hollywood and it's natural beauty, California has succeeded in driving away a "small but statistically significant percentage of high-income residents after voters approved Proposition 30." If you don't remember, Prop 30 was a ballot measure Californians approved in 2012 raising taxes on high income earners. The measure turned what had been a net-in migration of high income earners to California into what is now a net-out migration. Kathleen Pender explains in The San Francisco Chronicle: For singles, Prop. 30 raised the rate by one percentage point on … [Read more...]
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